Rising costs outweigh falling prices

31-Jan-2012

The increasing costs of essentials is outweighing the fall in mortgage costs, it has been found by the Royal Bank of Scotland (RBS), with first time buyers in Scotland being better off than the rest of the UK.

The new figures reveal that the ability-to-buy index has dropped from 109.1 in the third quarter of 2009 to 99 in the third quarter of 2011, which represents a positive move for first time buyers north of the border. The UK as a whole found it harder to buy, going from 97.3 in the third quarter of 2009 to 98.6 in the same period in 2011.

This research coincides with another RBS study that found buying a three-bedroom home in Scotland is 6 per cent cheaper than renting. The average monthly mortgage payment has declined by 37 per cent (£250) since 2008, which has contributed to the low cost of living for buyers.

Fionnuala Earley, RBS Group UK consumer economist, said: "Our first results show that higher living costs are making it more challenging for first-time buyers to enter the market, despite the lowest mortgage payments in almost a decade.

"But the news is not all bad - inflation is now beginning to fall and assuming earnings still rise and interest rates remain low, this should help to improve the ability for first time buyers to enter the market."

Shared equity mortgages allow first time buyers to buy their first home with a small deposit

Published by Helen Adams

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