Wednesday, Jan 30, 2008
Where did all the FTBs go...
Financial Times: Bigger deposits squeeze house buyers
A first-time buyer couple who were both in the bottom 25% of earnings, bringing in £26,595 a year after tax, would now have to save the equivalent of 104% of their joint annual take-home pay, or £27,729, in order to afford the deposit, fees and stamp duty they would have to pay to buy a typical home. That 104% today compares with just 23% in the easier market of 1996. The increasing difficulty is mostly due to lenders asking for bigger deposits. RICS said the average loan-to-value ratio offered to first-time buyers fell to 85 per cent in the fourth quarter compared with 86.5 per cent a year earlier.
Posted by drewster @ 03:32 AM (377 views) Add Comment
2 Comments
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1. talking rot said...
The cynic in me believes mortgage companies are expecting a large drop in the ethereal value of homes. A larger deposit will reduce the likelihood that they will loose money if the they repossess the building. They seem to be expecting, or planning for, a drop in home values.
This is another indicator that troubled times may be ahead.
2. planning4acrash said...
Requiring an 85% deposit is pricing in a 15% drop. They look at two yr fixed rates, so they are pricing in 15% drop over two years. I think that's optimistic on their behalf and expect prices to fall further!