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FTBs struggling as mortgage costs rise

First-time buyers are finding it increasingly difficult to get on the property ladder as affordability levels increase, according to Cheltenham & Gloucester.

Its quarterly housing affordability index found the cost of a mortgage for an average single-income homebuyer per £100 of take-home pay rose by 8.8 per cent to £33.40 in the final quarter of 2002 from £30.70 in the third quarter as house prices continued to rise.

But the present cost is still less than half the £71.30 of each £100 in take-home pay paid in the second quarter of 1990.

Joint-income first-time buyers saw their mortgage costs per £100 of take-home pay rise by 20 per cent to £18.60 in the final quarter of 2002 from £15.50 in the third quarter.

Houses were least affordable for joint-income firsttime buyers in London, costing £23.50 per £100 of take-home pay, while the most affordable were in the North at £11.80 per £100.

C&G says that although house price increases are damaging many people&#39s ability to get on the property ladder, overall levels remain reasonable.

Its affordability index compares the average monthly take-home pay, average property price and average monthly mortgage payment.

Managing director Roger Burden says: “There is much speculation as to where house prices will go in 2003. I believe we will see a gradual slowdown and a soft landing.

“It is clear that steam does need to be released in areas that have overheated but the indications for 2003 are that interest rates will remain low and that can only be good news in terms of affordability.”


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