Loan Affordability Better For First Time Buyers
For a few years now, the cost of taking out a home owner loan, coupled with the expense of raising a suitable deposit to comply with lenders stringent loan to value limits, has been one of the main stumbling blocks for those potential first time buyers looking to get themselves onto the housing market.
But according to a new survey from the Halifax, affordability levels on home owner loans for first time buyers is at its best for several years, although this does not seem to be the view shared by many who are trying to find a cheap loan.
According to the figures, the amount of income used by first time buyers to pay for their home owner loan has fallen by almost 50 per cent since 2007, yet there is only half the number of first time buyers entering the market, than there were back in 2007, although the figures have improved since twelve months ago.
The average level of income used to fund a home owner loan by first time buyers was around 50 per cent in June 2007. However, this figure had fallen to just 28 per cent by June this year, which is well below the 25 year average of 34 per cent.
The main reason given for the increase in affordability is due to a combination of low interest rates on loans, coupled with reduced property prices and in all probability, lower loan to value levels on more recent home owner loan products.
Steven Noakes of the Halifax said “Affordability has significantly improved, meaning the amount of a typical first time buyer’s monthly pay packet that needs to be dedicated to their mortgage is now below the 25 year average and importantly, despite perceptions, eight out of ten first time buyer mortgages are approved.”
