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First-time buyers under pressure First-time buyers are now borrowing a record average of 3.27 times their annual incomes to get a mortgage, the Council of Mortgage Lenders (CML) says. The figure shows how rising house prices have squeezed the finances of new buyers. In August last year the average first-time buyer borrowed just 3.08 times their income for a mortgage. The average amount borrowed now stands at ?112,000 on an income of ?34,469, with a typical 10% deposit. CML director general Michael Coogan said: "Overall affordability has worsened a little, especially for first-time buyers." Over the past year the proportion of first timers has dropped from 38% to 35% of all buyers, though that is still a much higher proportion than in the summer of 2004 when they made up just 27% of all buyers. Despite this extra financial stress, the number of first-time buyers taking out mortgages has in fact risen over the past twelve months, from 34,900 in August 2005 to 38,100 in August this year. Help from parents In August, the Royal Institution of Chartered Surveyors said that the average couple needed to save at least ?29,000 to pay for the deposit and stamp duty on their first home. It pointed out that prices had risen by 184% since 1995, three times faster than take-home pay. There is growing evidence that many new entrants to the property market are being helped financially by their parents, who are often cashing in on the inflated value of their own homes they bought many years ago. Parents are now contributing an average of almost ?18,000 to help their children onto the property ladder, a survey by Alliance & Leicester bank suggested. Often this takes the form of a deposit and in some cases it even involves helping to pay the monthly mortgage repayments.
First-time buyers under pressure First-time buyers are now borrowing a record average of 3.27 times their annual incomes to get a mortgage, the Council of Mortgage Lenders (CML) says. The figure shows how rising house prices have squeezed the finances of new buyers. In August last year the average first-time buyer borrowed just 3.08 times their income for a mortgage. The average amount borrowed now stands at ?112,000 on an income of ?34,469, with a typical 10% deposit. CML director general Michael Coogan said: "Overall affordability has worsened a little, especially for first-time buyers." Over the past year the proportion of first timers has dropped from 38% to 35% of all buyers, though that is still a much higher proportion than in the summer of 2004 when they made up just 27% of all buyers. Despite this extra financial stress, the number of first-time buyers taking out mortgages has in fact risen over the past twelve months, from 34,900 in August 2005 to 38,100 in August this year. Help from parents In August, the Royal Institution of Chartered Surveyors said that the average couple needed to save at least ?29,000 to pay for the deposit and stamp duty on their first home. It pointed out that prices had risen by 184% since 1995, three times faster than take-home pay. There is growing evidence that many new entrants to the property market are being helped financially by their parents, who are often cashing in on the inflated value of their own homes they bought many years ago. Parents are now contributing an average of almost ?18,000 to help their children onto the property ladder, a survey by Alliance & Leicester bank suggested. Often this takes the form of a deposit and in some cases it even involves helping to pay the monthly mortgage repayments.