Homeowner Loans Becoming More Affordable For First Time Buyers
A couple of years ago, it was a difficult job for many potential first time buyers to get themselves onto the housing market and find a home owner loan which they could actually afford.
Despite the fact that lending criteria was much more relaxed and it was possible to obtain a loan of up to 100 per cent loan to value, house prices and interest rates were much higher than they currently are, making the monthly home owner loan repayments too expensive for many would be home owners to be able to afford.
But according to new research from the Halifax, there has been a significant improvement in affordability levels for first time buyers over the course of the past couple of years.
In 2007, 6 per cent of regions were considered to be affordable for a first time buyer on average earnings, but this figure has now increased to 24 per cent, largely due to the drop in house prices and the lowering of interest rates making home owner loans and mortgages so much cheaper. In June 2007, the typical first time buyer would spend around 50 per cent of their earnings on their home owner loan, but by November last year this figure had dropped by almost half, to just 27 per cent.
Martin Ellis of the Halifax commented on the changes, he said “Housing affordability for potential first time buyers has improved substantially over the past two years due to the combination of lower house prices and reduced mortgage rates. Mortgage payments in relation to earnings are currently significantly below the average during the past twenty five years. The tightening in lending criteria over the past two years is, however, making it very difficult for some to take advantage of lower property prices and mortgage rates.”
