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6 July 2007

One third of income spent on mortgages

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by Kay Mitchell

One third of income spent on mortgages

In parts of London, people in their 20’s are spending 50% of their earnings on their mortgage. Rising interest rates and the house price boom means that first time buyers across the rest of the country are paying nearly one third of their household income on their mortgage.

The borough of Brent in London have the most stretched first time buyers, their mortgage payments are 48% of their income. However, in Staffordshire Moorlands, they are paying 18.9% of their household income.

Those who are fortunate enough to get onto the property ladder in their 20’s are paid an average of £586 per month in June, this is up £233 compared with the rate in 2002 – a significant 66% rise.

The latest research has been published by Woolwich Mortgage
Affordability, it also highlights the average amount of income spent on mortgages is by people in their 20’s – generally the age of first time buyers across the country, this figure was 32% in June, much higher than the figure for borrowers of all ages which stood at 20% of income in June.

According to the statistics, things will deteriorate for this age group, the average age of a first time buyer is likely to increase from the average of 29. With interest rates likely to increase again, the outlook for those in their 20’s doesn’t look good. It is expected that first time buyers will be well into their 30’s in the long-term.

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