First time buyers devote a third of income to mortgage

24 2008
Data from the Chartered Institute of Housing (CIH) and the Building Societies Association (BSA) has revealed that first-time buyers spent an average of one third of their income on mortgage payments last year, the highest proportion since the early 1990s.

In comparison to the cost of renting private accommodation, mortgages are becoming more and more unmanageable for UK first time buyers (FTBs), with the latest interest rate developments having done little to change the situation.

The report found that FTBs were spending almost 35 per cent of their income on mortgages in the third quarter of 2007, the most since the height of the last housing boom in 1990, when FTBs were shelling out 34 per cent of their wages.

Private rents, meanwhile, have largely kept in balance with earning over the last decade, according to the CIH, and are now substantially lower than mortgage costs.

According to MyFinances.co.uk, the report revealed that private renting sector has become far more competitive in the past five years, growing by 21 per cent to play a significant role in the UK housing market.

Official statistics have revealed that there were only 300,000 first time buyers last year, the lowest number since 1980, and 32 per cent below the ten year average of 440,000.
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