Annual price inflation continues to 'hurt' first time buyers

20-Nov-2006

First time buyers are continuing the face pressure from rising house prices, new research suggests.

According to AWD Moneyextra, first time buyers are struggling to gain a foothold on the property ladder as a result of double digit house price inflation, bringing the average cost of a first time buyer's property to nearly £176,500.

The average amount borrowed by a first time buyer has now risen to nearly £141,000, with a loan-to-value ratio of up to 80 per cent.

Existing home buyers, looking to move, are borrowing slightly more, at nearly £168,000, but with a lower loan-to-value ratio of around 62 per cent.

However, with house price inflation continuing to rise, the Bank of England is expected to continue to increase interest rates.

"With only three months since the previous base rate increase, the dust has barely settled in the world of mortgages and savings, and now it’s all change once again," said Lisa Taylor, an analyst at Moneyfacts.

"Consumers have probably only made a couple of mortgage repayments at the increased rate following the August rise and now must brace themselves to pay out even more," she added.

First time buyers concerned about how an increase in interest rates might effect how much they would have to pay each month should consult a good broker.

As the market for first time buyers toughens, new companies are offering new services to help first time buyers buy new properties by working with the house-builders.

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