Many first time buyers paying out a fortune on their mortgage

In a recent report industry officials have expressed concern over the fact that many first time buyers are paying around 35% of their total income on paying their mortgage, and this is thought to be the highest level since 1991. With high mortgage costs and other spiralling costs finances are often strained for first time buyers, but those on lower incomes may be paying a huge chunk of their income on their mortgage, putting them in real financial danger.

Many of today’s first time buyers have had to take out a huge mortgage loan due to the high value of property, and many are on lower incomes than older homeowners. In addition to this, they have had to take out higher income multiples spread over a longer term in order to increase affordability, and their situation could therefore go on for many years. With many of these homeowners paying out 35% of their total income on their mortgage, coping with other rising costs has become increasingly difficult.

One industry official recently said: ‘This is a disaster waiting to happen. The situation may be even more serious than it was in 1991 because so many other costs are spiralling. The financial squeeze may be too great for many. The extraordinary prices for petrol, gas and electricity combined with mortgage payments will push people over the edge. It will have a devastating effect on many people’s lives.’

Even potential first time buyers still waiting to get onto the property ladder are experiencing increased problems, with many unable to get a mortgage due to tighter credit conditions, and many having to find a far larger deposit than the traditional 5% due to increased levels imposed by lenders.

Recent additions:

• £1,300 a year hike on mortgages on the cards for some homeowners
• Ease of getting a mortgage is over
• More bad news for first time buyers
• Severe lending cutbacks from smaller building societies
• Sharp increases in buy to let mortgage figures

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