Borrowers' ability to afford their mortgages will continue to deteriorate heading towards next year, according to new research from Cheltenham & Gloucester.
The lender's quarterly housing index reveals little movement with the amount needed for a typical mortgage rising by just 0.7% during the last three months.
There is also little change for first time home buyers, with a 0.5% increase for single income buyers, and 1.2% increase for joint income buyers. Neither have had a significant change in the last year.
However, C&G predicts there will be a deterioration of house price growth in the future months which will gradually increase in 2004.
A decline in the market has been predicted in the past, because many assumed interest rates would rise. Instead, the rates have stayed at a low level for longer than they were expected to. An inevitable rise, it is predicted by economic forecasts, will begin in 2004, reaching a maximum of 4.25% in interest rates.
C&G's managing director Jon Pain says: “This scenario will lead to a small deterioration in affordability.”