Home Owner Loans Cheapest For 35 Years
Despite the fact that activity in the home owner loan and mortgage markets is particularly slow at the moment and that first time buyers are having extreme difficulty in obtaining the loan they require in order to buy their first home, the average cost of a typical home owner loan is now at its most affordable level in the past 35 years according to a recent survey.
The research, which comes from the Council of Mortgage Lenders (CML) found that home owner loans are now at their most affordable level for those individuals moving house since records began in 1975.
The survey found that those people who were moving house in May this year ended up spending an average of just 9.5 per cent of their income on their new home owner loan interest payments, largely due to the particularly low level of interest rates at the moment.
There was also some more positive news, along similar lines, for first time buyers during May. The average first time buyer only borrowed around 3.14 times their income with a loan of just 75 per cent loan to value. Loan interest payments accounted for 13.2 per cent of a typical first time buyer’s income, the lowest percentage since March 2004.
May also saw a general increase in the number of loans being approved, both for house purchase and remortgage, although the CML are more pessimistic about the second half of this year.
Michael Coogan of the CML said “House purchase lending continues its recovery but positive comparisons with equivalent months a year ago look unlikely to continue. Activity picked up in the second half of 2009 due to the stamp duty holiday, but, with the Government’s austerity drive picking up momentum, we are unlikely to see a repeat of those buoyant numbers this year.”
