Current market conditions are forcing FTB’s to take greater risks with regards to their borrowing, according to a new report.
Over the last 18 months the national rate of interest has rose a staggering 5 times with analysts predicting a further rise in coming months. As a result, first time buyers are discovering they have no other option than to borrow in untraditional multiples of their annual salary, with some FTB’s going as high as five times their income.
However, in a surprise twist the study has found that many FTB’s are emotionally comfortable with said borrowing levels, with few considering the potential repercussions. Even more surprising is the fact that almost 1/3rd of those surveyed would happily waiver payment protection insurance in favour of a larger advance on their potential home loan.
It would appear that today’s First time buyers are so consumed with a desire to get onto the property ladder, that they are ignoring any prospective effects on their future financial health. The biggest problem for many FTB’s and indeed homebuyers in general, is that the housing markets past strength has blindsided many peoples judgement.
Almost 80% of Brits consider the housing market to be the safest and most profitable way to invest their hard earned cash, with a similar percentage of people refusing to believe that it has the potential to decline. Experts fear that this attitude could be the undoing of many, suggesting that it is only a matter of time before the bubble eventually bursts.
