First time buyer loans on the up
There were 24,900 loans to first time buyers. This was the highest amount since November 2007.
It is thought that the reason so many first time buyers wanted loans was to get on the property market and buy a house before the Stamp Duty concession for properties under £175,000, finished at the end of 2009.
Despite this good news for first time buyers, the number of loans lent in general was still weaker than in previous years. Lending was down 43% from 2008 and 60% from 2007.
90% of loans advanced in December 2009 were repayment mortgages. Typical capital and interest payments for a recent first time buyer would represent about 21% of pre tax income. This is considerably more than the 14-15% that mortgage interest costs alone would be, and demonstrates why using initial mortgage interest costs to assess affordability risks gives a flattering picture.
Written by Sam peppercorn of Secured Loans