First Time Buyer Loans More Affordable
Despite the fact that the housing and home owner loan markets remain fairly stagnant at the present time, it would seem that home owner loans for first time buyers are at their most affordable level in the past twelve years.
The news comes from the latest figures from the Halifax, who have revealed that the average first time buyer loan takes up around 27 per cent of a buyer’s disposable income in the monthly loan repayments, which is the lowest percentage since December 1998.
At the peak of the housing and home owner loan market, back in September 2007, when loan interest rates were much higher than the current cheap loan rates, a typical first time buyer would need to use around 50 per cent of their disposable income each month on their loan repayments.
One reason for the current increased affordability levels on home owner loans is due to the extremely low level of interest rates at the moment, making loan repayments much cheaper.
The other main reason is due to the fact that the average first time buyer is now putting down a much larger deposit on a property in order to meet lender’s reduced loan to value criteria and therefore are not taking out as large a loan as they might have done in previous years.
This still seems to be the main stumbling block for many would be first time buyers. Whilst the cost of an average home owner loan is now much cheaper than it has been for many years, many individuals simply can not afford to save up the necessary deposit to meet loan to value criteria.
Martin Ellis of the Halifax said “Whilst the tightening in lending criteria experienced across the mortgage industry since the onset of the credit crunch in 2007 deterred first time buyers from trying to secure mortgage finance, there are now encouraging signs of a modest improvement in mortgage availability.”
