First-time buyers face biggest costs ever

In November first-time buyers were faced by the least affordable homes ever, new figures show.

Data from the Council of Mortgage Lenders (CML) shows the average first home costs 3.29 times the buyers' combined income - more than ever before.

And this is before recent interest rate hikes and rising mortgage costs are included.

"Month-on-month we see affordability constraints becoming more pronounced for first-time buyers, and last week's interest rate rise will increase these pressures," said Michael Coogan, CML director general.

The average first-time buyer mortgage was £113,877 in November, and the most recent increase in interest rates will add more than £200 a year to mortgage payments on this amount.

The rise in mortgage sizes and interest rates mean the percentage of income first-time buyers use to meet mortgage interest payments rose to a record 17.8 per cent in November.

On top of this, some 56 per cent of first-time buyers now pay stamp duty on their first homes, up from 48 per cent in the same month last year.

However, even in the face of these soaring costs, the number of first-time buyers is increasing. There were 37,000 first-time buyer mortgages sold in November, up from 35,300 in October.

"First-time buyers are clearly still keen to get on to the property ladder despite the growing financial hurdles, and it is essential that anyone wanting to buy their first home should look carefully at their finances and take a realistic view as to whether they can afford the costs of home-ownership if rates continue to rise," Mr Coogan said.

"First-time buyers should examine the benefits of taking out a fixed-rate deal for payment certainty in the next few years and make sure they are protected against any unforeseen changes in their personal circumstances."