Cost of first time buyer mortgage 'rising by 10% a year'

30-Aug-2007

The cost of a first time buyer mortgage has risen by an average of at least ten per cent each year since 1996, according to new research.

Mform.co.uk has said that the typical first time buyer mortgage has risen by a total of 173.6 per cent over the past ten years, and warned that the average price of such a product could reach £200,000 by 2012 if such trends continue.

The lender noted that this would mean that the traditional three-times-the salary income multiple would be out of reach for even more prospective homeowners.

"First time buyers increasingly need to find huge sums of money in order to get on to the property ladder," commented mform.co.uk marketing and business development director Francis Ghiloni.

"For a first-time buyer to take out a mortgage that is three times their salary today, we estimate that they would need to be earning £40,190, but by 2012, it would need to be a staggering £66,806," Mr Ghiloni added.

"This situation demonstrates how prudent borrowers and lenders alike should be," commented Helen Adams, managing director of First Time Buyers' advice centre FirstRungNow.com.

"The high multiples indicate that asking for parents for help in financing a deposit or mortgage is a sensible option for first time buyers in the UK. Getting onto the first rung of the property ladder is as desirable as ever, but all options should be explored," Ms Adams added.

The average first time buyer already borrows a mortgage worth a record 3.37 times their salary, according to the Council of Mortgage Lenders.

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