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High home costs deter new buyers | High home costs deter new buyers |
(about 3 hours later) | |
Rising house prices and higher interest rates have been forcing some first-time buyers out of the property market. | Rising house prices and higher interest rates have been forcing some first-time buyers out of the property market. |
In March, their numbers were 8% lower than a year ago at 33,100, said the Council of Mortgage lenders (CML). | In March, their numbers were 8% lower than a year ago at 33,100, said the Council of Mortgage lenders (CML). |
And they typically had to borrow 3.31 times their income - a record level previously only touched in December. | And they typically had to borrow 3.31 times their income - a record level previously only touched in December. |
The CML said the proportion of first timers' incomes now being swallowed up by interest payments was at its highest level for 15 years. | The CML said the proportion of first timers' incomes now being swallowed up by interest payments was at its highest level for 15 years. |
"The increasing costs of home-ownership are clearly deterring many potential first-time buyers from getting on to the property ladder," said the CML's director general Michael Coogan. | "The increasing costs of home-ownership are clearly deterring many potential first-time buyers from getting on to the property ladder," said the CML's director general Michael Coogan. |
Rate rises | Rate rises |
The situation is likely to get worse for would-be homeowners in the immediate future. | The situation is likely to get worse for would-be homeowners in the immediate future. |
It is widely expected that the Bank of England will raise interest rates again this week in an attempt to suppress the inflation rate, which now stands at 3.1% as measured by the Consumer Prices Index and 4.8% according to the Retail Prices Index. | It is widely expected that the Bank of England will raise interest rates again this week in an attempt to suppress the inflation rate, which now stands at 3.1% as measured by the Consumer Prices Index and 4.8% according to the Retail Prices Index. |
In the past year, house prices across the UK have risen by about 10%, helping to prompt the Bank of England to push up its basic lending rate three times, to 5.25%. | In the past year, house prices across the UK have risen by about 10%, helping to prompt the Bank of England to push up its basic lending rate three times, to 5.25%. |
This has had the inevitable effect of making it more expensive for new entrants to the property market. | This has had the inevitable effect of making it more expensive for new entrants to the property market. |
A year ago, their average borrowing multiple stood at 3.15 times income. | A year ago, their average borrowing multiple stood at 3.15 times income. |
And over that time, the proportion of first timers' incomes that goes on interest payments alone has risen from 16% to 18.3% - the highest proportion since the spring of 1992. | And over that time, the proportion of first timers' incomes that goes on interest payments alone has risen from 16% to 18.3% - the highest proportion since the spring of 1992. |
"First time buyers now face huge barriers to home ownership," said David Stubbs of the Royal Institution of Chartered Surveyors. | |
"With higher interest rates on the way, the situation looks certain to deteriorate further in coming months," he added. |
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