Mform Unveils Financial Strain Of Property Buyers

Despite a weakening housing sector getting on to the property market continues to squeeze the finances of would-be first-time buyers.

Such is the assertion of mform, which revealed that although the overall economic climate has weakened in recent months, those looking to make their first steps on the housing ladder are finding doing so is becoming an increasingly expensive process. In the firm’s research it was indicated that the typical first-time buyer needs to earn more money in order to afford mortgage payments. It was stated that currently an average annual salary of 41,600 pounds is required in order to afford a home. Such a figure represents an increase from the 34,000 pound wage which was noted in 2007.

In particular it was revealed that young first-time buyers “are being squeezed hardest”, with those under the age of 30 shown to currently account for about a third (34.5 per cent) of mortgage applications analysed. However, would-be property owners in this age group accounted for about half of all applicants during last year.

Following on from facing a larger financial commitment in order to get on to the housing ladder, it may be possible that prospective first-time buyers find their ability to meet various areas of monetary constraint such as loans, credit and store cards, transport costs and household bills comes under strain.

Meanwhile, it was reported that in 2007 the typical loan lender approved an average loan-to-value rate of 85 per cent. However, this has since fallen to 77 per cent.

Francis Ghiloni, marketing and business development director for mform, said: “The end of the housing market boom with house prices dropping ought to be good news for first-time buyers who can finally be in a position to afford the home that was out of reach.

“However with the mortgage market contracting lenders are getting tougher on how much they’ll lend and what level of deposit they’ll demand which means first-time buyers are yet to see much benefit from the house price slide. Availability remains the major issue for the mortgage market but the focus for borrowers should still be on the true cost of their loan taking into account all fees as well as the monthly payments.”

The study also reported that a typical first-time buyer home bought through the firm this year costs 170,540 pounds, with the average loan taken out to fund a property purchase standing at 127,000 pounds. However, in 2007 the average house bought by those making their initial moves on the property ladder stood at 149,800 pounds.

Would-be property buyers wanting an effective way in which to fund getting on to the housing ladder might wish to consider applying for a cheap loan. In doing so, it may be possible borrowers can meet various costs attached to purchasing a home – such as moving expenses, deposits and legal fees – quickly and affordably. Such a loan might also help those after they have moved into their home after a recent MoneyExpert study showed that the average property owner has a weekly total expenditure of just over 216 pounds across areas including utility bills, transport costs and foods. Those renting a home were indicated as spending an average of 133 pounds and 90 pence.

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