The Council of Mortgage Lenders CML has indicated that first time buyers are now spending almost a fifth of their income on interest only mortgage repayments, due the increase in the interest rate. Following the latest interest rate increases, the Council of Mortgage Lenders has indicated that homeowners are spending on average an extra £30 a month on interest payments.
As a result of the rise in house prices and the interest rate, the Council of Mortgage Lenders has also found that the multiples of income have reached a new level of 3.31 x their average income for first time buyers. The director-general of the Council of Mortgage Lenders, Michael Coogan, believes that affordability is still the barrier with first time buyers trying to get on the property ladder.
Our view
We believe that interest rates will remain at this level, or may have one further increase and then will remain steady for some time and this is what first time buyers should be budgeting for.