View more on these topics

First-time buyers face further base rate misery

First-time buyers’ endangered status worsened last week with the threat of further base rate rises and mortgage interest payments hitting a 15-year high.

Office of National Statistics figures show that consumer price inflation dropped to 2.5% in May from 2.8% in April. And Mervyn King, governor of the Bank of England, predicts it will continue to fall in the coming months.

However, he also warns that further rate rises may be necessary to hit the government’s inflation target of 2%.

Speaking to the Confederation of British Industry in Cardiff, King told delegates: “If indicators remain elevat-ed, the Monetary Policy Committee may need to take furtheraction.”

His admission came as data from the Council of Mortgage Lenders’ regulated mortgage survey showed that first-time buyers in April were spending 18.7% of their income on mortgage interest – up from 16.3% in April 2006 and the highest level seen since 1992.

Michael Coogan, director-general of the CML, says: “Month on month we see affordability constraints for first-time buyers worsening.

“And with the impact of May’s base rate rise still to be felt, borrowers will face higher costs.”

Robert Bryant-Pearson, chief executive of Allied Surveyors, says: “If the BoE continues to drive up interest rates it will drive out first-time buyers, the lifeblood of the market. It would be a catastrophic move.”

Recommended

Average House price hits £260,832 in May

The average price for a new home reached £260,832 in May – the highest average price for a new home ever recorded by the SmartNewHomes.com monthly index.Fuelled by a buoyant demand for new homes across large areas of the UK and led by strong price growth in both East Anglia and the South West, the […]

LMS says RICS has its head in the sand over HIPs

LMS has hit out at the latest statement from the Royal Institution of Chartered Surveyors, saying it has “its head in the sand” over Home Information Packs.Dominic Toller, director of marketing and new business at LMS, says: “What has become abundantly clear throughout this process is that RICS has got its head in the sand […]

UCB reprices range

UCB Home Loans is slashing rates on its self-cert and buy-to-let two-year trackers.At the same time, it will be increasing fixed rates on prime self-cert and buy-to-let two, three and five-year products.It will also be increasing the fixed rates on very near prime self-cert and full-status, as well as on prime full-status two and three […]

Yousefi breaks for Freedom on August 13

Freedom Lending has confirmed that Mehrdad Yousefi will be taking up his post as director of distribution and sales on August 13.Yousefi joins Freedom Lending from the Alliance & Leicester where he is currently head of intermediary mortgages and will take responsibility for implementing and developing Freedom Lending’s distribution strategy. He will have responsibility for […]

How to balance bottom-up with top-down research in constructing multi-asset credit portfolios

In this short video, Azhar Hussain, head of global high yield at Royal London Asset Management, explains how his team balance bottom-up with top-down research in constructing multi-asset credit portfolios. Watch the video in full The value of investments and the income from them is not guaranteed and may go down as well as up […]

Newsletter

News and expert analysis straight to your inbox

Sign up