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Buy To Let

First time buyers squeezed out by mortgage cap

Cherry Reynard
Written By:
Cherry Reynard
Posted:
Updated:
21/07/2014

Booming house prices continue to squeeze out first time buyers, according to the National Association of Estate Agents (NAEA).

House sales by first time buyers are down from 25 per cent of the market in May to 20 per cent in June, the lowest level recorded since May 2013. Buyers aged 18 to 30 represented just 3 per cent of all house sales in June, the lowest percentage of young house buyers recorded by the NAEA to-date.

Estate agents are blaming the recent actions by Bank of England governor Mark Carney capping high risk mortgages. Nearly 80 per cent of NAEA member agents believe the recent announcement, which will see only 15 per cent of new mortgages at 4.5 times a borrower’s income, will affect the number of first-time buyers and home owners looking to move.

Mark Hayward, managing director of the National Association of Estate Agents, said: “Things are getting even tougher for first time buyers. Not only do you now need to stump up ridiculously large sums of money in terms of deposits and stamp duty to be able to get on the ladder, but new rules mean buyers will also have to prove they can easily afford repayments now and in the future. Alongside this, a scaling back of the governments Help to Buy scheme and the implementation of the MMR in April will also have a significantly negative impact on the first time buyer market. ”

This month’s NAEA housing report saw an increase in the average number of properties available per NAEA member branch.  Available properties increased to an average of 46 in June, compared to 44 in May 2014. However, the number of properties available per member branch is still historically low, and has not reached above 50 per month since November 2013, and above 60 since May 2013.

The average number of house hunters registering with NAEA agents decreased slightly in June, from an average of 374 house hunters in May to 371 in June. However, NAEA member agents also reported a decrease in the average number of sales agreed per branch, down from ten in May to nine in June.