First Time Buyers Unable To Get On Ladder
It is difficult for anyone who may be considering moving house at the moment, given the current state of affairs within the housing and home loan markets, but spare a thought for those first time buyers out there who may be looking to get established on the housing ladder and buy their first home.
It has always been tough for first time buyers, scraping enough money together for a deposit plus all the other costs, and then managing to be accepted for a home loan, without any previous track record of loan repayments, but according to the latest affordability and accessibility statistics from the Royal Institution of Chartered Surveyors (RICS), a couple with only a low income have almost no chance at all of being able to afford to buy a home for the first time.
The survey showed that a low earning couple would now need to save up 100% of their joint regular income to be able to afford the average deposit plus other associated costs such as stamp duty.
To put this figure in perspective, in 1996 the same couple would only have had to save 21% of their pay. This is mainly due to lenders restricting the maximum loan to value ratio they are prepared to offer on home loans as well as reducing the income multiple calculation.
Many potential first time buyers are now opting to rent for a longer period rather than try and buy a house, in the hope that prices may well reduce over the next six months or so and also so that they can have a chance to save up the required level of funding for a suitable deposit. This will mean that when they do eventually buy, their monthly repayments on the home loan are likely to be less than they may have otherwise been, although with high inflation and other rising costs causing incomes to stagnate in real terms at the present time, this is likely to be of little help or comfort.
