Two million first time buyers struggling with rate rises

05-Jun-2007

As many as two million young homeowners, including numerous first time buyers, have said that they are now struggling to keep up with mortgage repayments following recent interest rate rises, new research has found.

A study from mform.co.uk has found that a further 600,000 feel they will be similarly positioned were the Bank of England to raise the base rate once more – a move many analysts feel is likely to happen in July.

The cost of a first time buyer's average mortgage was 9.96 per cent greater this March than it was 12 months' previous, mform analysis indicates, yet income rises only reached 5.89 per cent.

First time buyers now borrow 3.3 times their income on average, with 21 per cent borrowing at four times their income, recent statistics from the Council of Mortgage Lenders have shown.

Prices continue to rise across the UK, with London continuing to set the pace for the rest of the country, while prices in Scotland for first time buyers have doubled over the past five years, according to the Bank of Scotland. Similarly, prospective homeowners in Northern Ireland are facing annual house price inflation of 46 per cent, it was revealed yesterday.

To find out about those mortgages specifically aimed at first time buyers, see our best buys for first time buyers table.

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