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First-time buyers taking risks

January 29, 2007 by admin  
Filed under News, News-Mortgages

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First-time buyers are prepared to take bigger financial risks to get on the property ladder as house prices continue to rise.

As the third interest rate rise in five months looks set to have just a minor impact on the price of a house, Yorkshire Bank says many consumers feel forced into taking big chances with their future.

According to the bank, three out of five first-time buyers would consider taking out a home loan that was five times their income.

In addition, 80 per cent would also consider getting a mortgage which is paid back over more than 25 years in order to make the monthly payments more manageable.

“With the average house price nearing £200,000, this year may feel like the last chance saloon for first-time buyers already finding it hard to buy,” said Gary Lumby from the bank.

“Saddling themselves with such huge debts isn’t wise as they could still be paying off their mortgage well into their sixties or even seventies.

“They may also face breaking point should interest rates increase again. Unfortunately for some, they feel it is their only option,” he added.

Yorkshire Bank has also found that 28 per cent of first-time buyers are so keen to get onto the property ladder that they are willing to offer above the asking price straight away for a house which they want.

In response to the current housing climate, 15 per cent of parents have started a home fund to help their children buy a house when they are older.

Tags: bank, property, council of mortgage lenders, business, yorkshire bank

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