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Mortgage burden hits record level

Published on 16/07/2007

The Council of Mortgage Lenders (CML) says that the burden of taking out a mortgage has now reached record levels. 





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

Due to the rising interest rates, interest payments for first-timers took up 19.1% of their incomes, the highest percentage since 1992. Other home movers saw interest payments taking 16.6% of their incomes.

CML's director general Michael Coogan said "For anyone wanting to get a foot on the property ladder or move house, each month, affordability is becoming worse. 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 rate still set to go higher fixed-rate mortgages are still proving very popular.

The CML said that 89% of first-time buyers and 73% of home movers took out a fixed-rate deal in May, which was up from 88% of first-timers and 72% of other house buyers in April.

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





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