The average first-time buyer mortgage has doubled in 4 years
First-time buyer mortgages double
Tuesday, 31 Jul 2007 16:01
The size of the average mortgage needed by first-time buyers has almost doubled in the last four years alone.
New figures from Abbey show to get on the property ladder new homeowners are now forced to borrow on average £130,000. This compares to the average amount of £75,000 borrowed by first-time buyers four years ago in 2003.
"We are fully aware of the difficulties first-time buyers have in getting onto the property ladder," said Nici Audhlam Gardiner, head of mortgages at Abbey.
"Our research shows that they have to borrow more and more to get even a small foot on the ladder."
And the current average figure masks the fact the majority of first-time buyers are now borrowing more than £150,000 compared with 16 per cent four years ago.
There has also been an increase in the number of first-time buyer mortgages taken out for more than 75 per cent of the value of the property - from 67 per cent in 2003 to almost 80 per cent in 2007.
The average price of a first-time buyer home in 2003 was £86,653 according to the Halifax house price index. By mid 2007 this had risen to £151,923 in the UK and £258,062 in London.
And it is not just house prices that are rising.
In August 2003 the Bank of England cut interest rates to the historic low figure of 3.5 per cent seeing mortgage rates tumble. By contrast base rate is now running at 5.75 per cent with many economists predicting it will rise again to a new six-year high of six per cent before the end of the summer.