First-time buyers ‘risking a lot’ to get on ladder
First-time homebuyers struggling to get on to the property ladder are becoming increasingly prepared to take financial risks, according to Yorkshire Bank.
With house price inflation affecting their UK investment currently running at 8.9%, many potential borrowers are considering mortgages at five times their salary to afford their purchase.
Furthermore, Yorkshire Bank’s latest Housebuyer’s report has found that many borrowers are no longer frightened off by mortgages set at more than the standard 25 years to make the payments more manageable.
Gary Lumby, head of retail at Yorkshire Bank, said: “With the average house price approaching £200,000, this year may be the last chance saloon for first-time buyers already finding it hard to buy.
“Two rate rises last year did little to slow prices and it looks unlikely that the latest one this year will have any significant impact either. Their fears are that the longer they leave it to buy, the harder it will be.”
He continued: “To try to get on to the property ladder now before prices are totally out of reach, first-timers are taking greater financial risks with the majority now considering mortgages which are more than five times their income or take longer than 25 years to pay off. They are risking a lot if things go wrong.”
Lumby also pointed out that one in four potential homebuyers (28%) are prepared to make an offer above the asking price to make the UK investment to secure the property they want.