Mortgage rates 'out of reach' for FTBs
The average interest rate on a mortgage for a first-time buyer (FTB) has reached a seven-and-a-half year high, it has emerged.
While many first-time buyers find themselves unable to take out a mortgage at all - relying solely on rental property instead - those who can secure a home loan now face an average mortgage rate of 6.55 per cent.
That compares with 6.42 per cent just one month ago and marks the highest level since August 2000, when the base rate of borrowing was a full 75 base points above the current level at six per cent.
Analysts say the tightened lending criteria reflect worsening conditions in the wider mortgage market, with first-time buyers being singled out as one of the first casualties of the credit crunch.
Global financial markets have been in turmoil since the US sub-prime crash last autumn, which left financial institutions increasingly risk averse and so less willing to lend to newcomers to the property market.
Recent research also showed that average loan-to-value (LTV) ratios are falling, meaning prospective homeowners are having to find ever larger deposits before being considered for a mortgage.
Published 14th March, 2008
© 2008 Estates IT Limited
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The average interest rate on a mortgage for a first-time buyer (FTB) has reached a seven-and-a-half year high, it has emerged.