First time buyers 'may increasingly face mortgage arrears'

25-Jan-2007

First time buyers may increasingly find themselves suffering from further interest rate rises over the coming months, experts suggest.

According to research conducted by the Royal Institution of Chartered Surveyors (Rics), first time buyers will increasingly fall behind on their mortgage payments when compared with homebuyers in the buy-to-let sector.

With affordability at its lowest level since 1992, 0.96 per cent of all mortgages are currently in arrears, compared with 0.69 per cent of buy-to-let mortgages.

To find out about all about different ways of financing a first home, see our section ‘Affording Your First Home’.

"Buy-to-let investors will be less at risk from repossessions in the coming months," said David Stubbs, an economist at Rics.

"Older, wiser investors are likely to ride out periods of interest rate rises looking to the benefits of long-term capital growth rather than short-term rental income," he added.

The Bank of England's monetary policy committee voted for January's interest rate rises by a margin of five to-four, causing many experts to think that a further rise next month is unlikely, according to Reuters.

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