Fri, 11 May 07
More homeowners in the UK are taking out fixed rate mortgages than ever before, reports ABC Money...
The Council of Mortgage Lenders said a record 78 pct of all mortgages taken out during March were of the fixed variety, against 75 pct in February.
It's the same story with first time buyers. The CML said a record 88 pct of them chose a fixed rate product in March against 87 pct the previous month.
'With a rise in interest rates widely expected later this week it is encouraging that those first-time buyers who are getting a foot on the property ladder are opting for fixed-rate products,' said CML director general Michael Coogan.
The Bank of England is seen as a dead-cert to raise its key repo rate another quarter point to 5.50 pct on Thursday to rein in inflationary pressures. There's even some speculation that the nine-member rate-setting panel may be tempted to lift borrowing costs a half percentage point.
Affordability constraints growing
However affordability constraints for first time buyers are growing, the CML said. First-time buyers in March spent an average 18.3 pct of their income on mortgage interest payments, compared with 18 pct in February and 16 pct in the same month last year.
The CML said the rise, which largely reflects increases in interest rates, means that the proportion of first-time buyers' income consumed by mortgage payments is the highest figure since 1991.
The CML's survey also found that first-time buyer income multiples have edged up over the past year to 3.31 times the average first-time buyer income - up from 3.30 in February and 3.15 times in the same month in 2006.
'Affordability constraints continue to be a barrier to home-ownership for many first-time buyers,' said Coogan.
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