First-time buyers need half their income for mortgage payments

28 2008
Most people taking their first steps onto the property ladder are now spending almost half their income on mortgage repayments, new figures suggest.

Nationwide, the UK's biggest building society, has highlighted the growing effect of the current economic downturn by confirming that first-time buyers are devoting 49 per cent of their salaries on average to their mortgages.

That statistic represents a 20-year high, and has some observers concerned that a housing crash similar to the one experienced in the early 1990s could be imminent.

Mark Sands, debt specialist at accountancy firm KPMG, told the Daily Telegraph: "Disposable incomes are going to be squeezed more and more this year.

"My worry is that people will not be able to borrow themselves out of trouble. Previously people could have re-mortgaged their homes or taken out more debt on their credit cards, but these avenues have been more or less closed thanks to the credit crisis and the faltering housing market."

According to the Council of Mortgage Lenders (CML), the average new mortgage at the start of 2007 was 3.15 times the salary of the buyer, which compares to 2.2 during 1989 and 1990.
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