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Affordability still stopping FTBs

Despite monthly mortgage payments as a percentage of income at half 2007 levels first time buyers cite affordability as the main reason for not buying a home, Halifax research shows.

The numbers of first-time buyers in the first half of 2010, at 94,600, an increase of 28% on last year, but half the same period in 2007.

The proportion of a typical new homeowner’s disposable earnings devoted to mortgage payments has almost halved from a peak of 50% in June 2007 to 28% in June 2010.

In addition, 94% of first-time property purchases are now exempt from stamp duty, with 54% of first-time buyers saying it helped them buy their home.

But tightening in lending criteria has deterred first-buyers but Halifax says the environment may be improving. 

Only 3% of first-time buyers say a lack of suitable mortgage products has prevented them buying a home and eight out of 10 first-time buyer mortgages are approved. 

Stephen Noakes, commercial director for mortgages at Halifax, says: “We believe it’s important that first-time buyers understand that whilst there are still challenges in raising deposits, other market conditions are more positive.

“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 10 first-time buyer mortgages are approved.”

The average first time buyer takes three to five years to save for a deposit with 10% moving back in with their parents.

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  • Grey Haired Underwriter 19th August 2010 at 2:23 pm

    Perhaps it’s because a lot of FTBs don’t want to move into a property unless they have it fully kitted out with new furniture, all white goods, and a full selection of all electrical equipment!