Mortgage affordability improves for first-time buyers
A report by the Halifax has given fresh hope to those looking to gain a step on the property ladder with news that affordability for first-time buyers has improved significantly over the last 12 months. At this moment in time nearly 40% of local authority districts in the UK are now affordable to those looking to buy their first property, against just 6% in 2007 and 24% in 2008/9. This is a significant jump in the affordability factor and when you also take into account lower mortgage rates and higher disposable incomes the situation looks better for first-time buyers than many people might have assumed.
The average first-time buyer will now need to use just 27% of their disposable income as opposed to 50% at the peak of the property market back in 2007. This is well below the average over the last 25 years which has been 34%. When you consider the amount of disposable income required today against that required in 2007 it is no surprise that many first-time buyers struggled when the recession began and property prices slumped.
These are the type of reports which lay bare the greed we have seen from many mortgage providers in the UK who were chasing their next deal in the boom times. While many mortgage companies have been hit with defaults and repossessions, there is no doubt that property owners in the UK have taken the brunt of the pain. Will mortgage providers ever learn? Will first-time buyers continue to push themselves to the financial limit?
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