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FTBs hit by income multiple high

First-time buyers saw affordability pressure continue to bite as income multiples reached their highest-ever level in November

Multiples were at 3.29 times the average first-time buyer household income, according to data from the Council of Mortgage Lenders. This was up from 3.27 times in October, and 3.08 times in the same month last year.

The new figures come on the back of last week’s decision by the Bank of England to raise interest rates by 0.25 per cent to 5.25 per cent – the highest level since May 2001 – to compound the problem.

In November, the average first-time buyer mortgage was £113,877 and the latest increase in interest rates will add an extra £17 to average monthly mortgage payments.

CML director general Michael Coogan says: “Month-on-month we see affordability constraints becoming more pronounced for first-time buyers, and last week’s interest rate rise will increase these pressures. But first-time buyers are clearly still keen to get on to the property ladder despite the growing financial hurdles, and it is essential that anyone wanting to buy their first home should look carefully at their finances and take a realistic view as to whether they can afford the costs of home-ownership if rates continue to rise.

“First-time buyers should examine the benefits of taking out a fixed-rate deal for payment certainty in the next few years and make sure they are protected against any unforeseen changes in their personal circumstances.”

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