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Hpc In The Press Again

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First-time buyers tempted by offers of huge loans

Many lenders will now give up to five times salary to young homebuyers. Emma Lunn reports

Saturday August 12, 2006

The Guardian

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First-time buyers are stretching their borrowing to the limit to get a toehold on the property ladder, according to the Council of Mortgage Lenders, which revealed this week that income multiples have hit record levels.

The average first-time buyer borrowed 3.21 times their income when taking out a mortgage in June - this is the highest figure ever recorded by the CML, even higher than at the height of the late 80s property boom. It compares with an average of 3.06 times income in June last year.

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Many lenders are now prepared to lend as much as five times a borrower's annual income. For example, Yorkshire Building Society increased the income multiples it uses on some products earlier this year, with multiples of up to 4.75 times salary available on its first-time buyer loans.

Many banks prefer to use "affordability" calculations, which are based on outgoings rather than salary multiples. These usually translate into much higher loans.

Alliance & Leicester, Abbey, Intelligent Finance, Northern Rock and the Royal Bank of Scotland are generally tipped as lenders likely to be generous in how much they will lend to first-time buyers.

Ray Boulger of John Charcol says: "Couples with two good incomes buying a property together, will find they can get up to five times their joint income. But single people with some debt commitments will only be able to borrow less."

Stumping up a deposit is usually one of the biggest problems for first-time buyers. However, some lenders will offer first-time buyers 100% loans - including Standard Life, Portman Building Society and the Bank of Ireland. But 100% deals come at a premium price and these deals are all pegged on an interest rate well above 5%.

Mr Boulger says: "If you're borrowing more than 90% loan-to-value, look for deals without a 'higher lending charge' such as those from Nationwide and Northern Rock. If you manage to save up a 10% deposit, the world is your oyster and you will have the pick of the best deals."

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One, housepricecrash.co.uk, features predictions from Capital Economics, which says the housing market is "fundamentally overvalued" and reckons prices will fall by 5% this year.

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Sorry messed up quotes!!

Edited by Buffer Bear

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http://money.guardian.co.uk/property/first...1842678,00.html

Homebuyers should be careful about how much they borrow and avoid being too gung-ho about future price rises. Most housing economists are fairly relaxed about future price growth, pencilling in 5% on average this year - but there are plenty of pundits predicting doom and gloom.

One, housepricecrash.co.uk, features predictions from Capital Economics, which says the housing market is "fundamentally overvalued" and reckons prices will fall by 5% this year.

:)

Edited by Dames

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some lenders will offer first-time buyers 100% loans - including Standard Life, Portman Building Society and the Bank of Ireland. But 100% deals come at a premium price and these deals are all pegged on an interest rate well above 5%.

Hey - what a great deal!

Buy a grossly overpriced house, with no down-payment to act as a cushion in case of deflation, and to top it all, your loan interest rate is significantly higher than most other borrowers!

Where do I sign??!?!!!

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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