Mortgage burden now at record level

The burden of taking out a mortgage has now reached record levels, according to The Council of Mortgage Lenders (CML).

In May, first-time buyers had to borrow 3.37 times their incomes to pay for a mortgage while other mortgage consumers had to borrow 3.03 times.

Interest payments for first-time buyers were 19.1% of their incomes, while it reached 16.6% of incomes for other mortgage buyers.

"For anyone wanting to get a foot on the property ladder or move house, each month, affordability is becoming worse" said CML's director general Michael Coogan.

"Today's data does not take into account either of the 0.25% rate rises in May and July - so it is inevitable that affordability pressures will become even more pronounced in the coming months," he added.
With interest rates still set to go higher than the current level of 5.75, the popularity of fixed-rate mortgages is still high.

The CML stated that 89% of first-time buyers and 73% of home movers took out a fixed-rate deal in May, which was a 1% overall rise from mortgage buyers in April.

Also, in spite of the 5 interest rate rises since last summer, UK house have continued to rise steadily and are now 11% higher than they were a year ago.