Houses more expensive for first-time buyers

New figures show it has become harder for first-time buyers to purchase their first home.

Data from the Council of Mortgage Lenders (CML) shows in March new homeowners spent an average 18.3 per cent of their income on mortgage interest payments - the highest proportion since 1991.

Additionally, Brits are borrowing more to finance their first home, with average income multiples rising to 3.31, up from 3.15 times in the same month in 2006.

This has led to the number of people buying for the first time dropping eight per cent compared with the same month last year.

And with interest rates forecast to rise, some 88 per cent of first-time buyers chose a fixed-rate mortgage - the highest proportion ever - with 78 per cent of all loans being fixed-rates, another record.

"With a rise in interest rates widely expected later this week it is encouraging that those first-time buyers who are getting a foot on the property ladder are opting for fixed-rate products," said CML director general Michael Coogan.

"Affordability constraints continue to be a barrier to home-ownership for many first-time buyers. Mortgage lenders are trying to help by offering innovative products where appropriate but will want to ensure lending remains prudent."

Those looking for a fixed-rate mortgage can still secure a home loan charging under five per cent, even days before an anticipated increase in UK base rate to 5.5 per cent, but deals are disappearing fast and borrowers will have to pay a hefty fee.

There are currently 14 lenders offering fixed-rate home loans charging less than five per cent, however these come with average application fees of £2,062, figures from MoneyExpert.com reveal.

"There are still some good products out there but none of the five per cent club will tie you in for longer than two years and with such hefty application fees you may be better seeking out a slightly higher rate," said Sean Gardner, chief executive of MoneyExpert.