First time buyers trapped by rent rises |
First time buyers are being squeezed again, by surging rents - up by almost a third in some areas - and by yet another increase in borrowing costs.
Monthly bills for a rented home have raised by an average 11.7 per cent across Britain in the past year, according to research from Paragon, a buy-to-let mortgage lender.
Tenants in the South West have been hit hardest, paying almost 30 per cent more in rent than a year ago, with those in East Anglia, the North and Yorkshire reeling from increases of up to 25 per cent.
Banks turned the screws even tighter when they raised the cost of borrowing, increased rates and demanded bigger deposits. One lender, Woolwich, will require as much as 20 per cent of the value of the property on many of its popular mortgage deals.
The difficulty in raising such high deposits, particularly for first-time buyers, accounts for the fall in mortgage approvals. According to the British Bankers Association, approvals dropped by more than half in May to a new low of 27,986 loans. Since April last year the number of first-time buyer loans has also fallen by 35 per cent.
Mortgage approvals are a key indicator of the health of the housing market, and these latest figures suggest that house sales could halve this year, down from a peak of 1.78million in 2004 to an estimated 1.17million.
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Added on 28/06/2008 19:48:06
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