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First time buyers borrowing record sums, reveals CML

The average first-time buyer paid a record 3.21 times their income to get a mortgage, according to data from the Council of Mortgage Lenders.

This was up from 3.2 times the average income in May, and 3.06 times in June last year.

Despite the rise, the number of first-time buyers taking out new loans went up by 14 per cent from 34,800 in May to 39,500 in June. This is the highest number of first-time buyers to get on the housing ladder since December 2002, when the total was 44,000.

The survey also revealed a jump of 24 per cent in the number of people taking out tracker loans which went up from 30,000 in May, to 38,800 in June, and accounted for 19 per cent of all new loans.

Fixed-rate mortgage products declined slightly by 2 per cent from 143,200 in May, to 140,600 loans in June.

CML director general Michael Coogan says: “It is interesting to see that even though average first-time buyer income multiples are the highest on record, first-time buyers are still finding ways of getting on to the property ladder.

It is highly likely that more and more young buyers are turning to parents and grandparents to help them raise the deposit for their first home.

“This month’s jump in the number of people taking out tracker loans which follow the base rate is mainly due to their attractive pricing over recent months. But fixed-rate products still remain the dominant mortgage product for the majority of borrowers.

This is encouraging, because it shows that many people are thinking of their financial future and locking themselves in to attractive rates in the short-to-medium term to ensure payment certainty.”

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