Wednesday, April 15, 2009

Housing first-time buyers return but need 25 per cent deposit

Mortgage lending edged up 4 per cent in February, helped by a 7 per cent rise in loans to first time buyers, according the Council of Mortgage Lenders.

Tight lending constraints remain a barrier to most first-time buyers with most typically providing a deposit of 25% in February, a new record.

But frst-time buyers are returning to the housing market with 9,400 loans made in February - a 7% monthly increase. The figure is still significantly less than the 17,400 in February 2008.

General lending activity remains very weak compared to historical levels, running at around one-third of the average February total of 76,000 loans for house purchase between 2002 and 2007.

First-time buyers typically borrowed 2.95 times their income, down from three times in January. The average first-time buyer loan was ВЈ95,000, down from ВЈ97,000 in January and ВЈ114,000 in February last year.


Housing first-time buyers return but need 25 per cent deposit


This decline reflects the change in house prices over the same period and the growth in the size of first-time buyer deposits.

Lower income multiples and mortgage rates have made affordability considerably easier for those able to get a mortgage. Interest payments consumed 15.4% of the average first-time buyer’s income in February, down from 20.1% in February 2008 and the lowest proportion since June 2004.

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