Thursday, March 29, 2007
Recent FTBs not as ‘at risk’ as other borrowers
The length of mortgage terms has increased in some cases and, over a number of years, there has been an increased in take up of loans classified as interest-only. These remain more popular with movers, rather than first-time buyers. There has also been greater use of affordability models based on ability to meet payments, rather than a simple loan to earnings ratio. Despite being stretched, the vast majority of recent first-time buyers are not at risk of an imminent rise in loan payments. The CML's data reveals that the share of first-time buyers taking out fixed rate mortgages has been around 80% in the last eighteen months, and was at 85% at the start of this year.