First-time home buyers are paying more on their mortgages than at any time since the last recession, figures released yesterday reveal.
As the City braced itself for at least a quarter-point rise in interest rates tomorrow, the Council of Mortgage Lenders (CML) reported that first-time buyers are paying an average of 18.3 per cent of their income in mortgage interest payments. This is the highest figure since the end of 1991.
Sixteen years ago the problem was base rates, which stood at 10.5 per cent. Today it is the soaring cost of property compared to average incomes that is forcing first-time buyers to stretch their borrowing. Mortgage companies are lending an average of three times income, while for first-time buyers the figure is 3.3 times, the CML said. Both figures are the highest since its records began in 1974.
But experts fear that their woes will deepen this week, as an interest rate rise to at least 5.5 per cent is considered a certainty when the Bank of England’s Monetary Policy Committee meets tomorrow.
First-time repayments highest since 1991