Property News

Tuesday, October 03, 2006

Mortgage payment squeeze

Mortgage payments take up far more of our income than ten years ago, new figures show.

Data from Moneyfacts.co.uk shows that despite lower mortgage rates and higher wages, in the last ten years the proportion of incomes being used up by mortgage payments by first-time buyers has shot up more than 45%. This increase in costs has been driven by an increase in average house prices and the removal of mortgage tax relief (MIRAS).

In 1996 the average first-time buyer took out a mortgage of £39,811 on a salary of £17,308. This equated to a monthly mortgage payment of £264.84 taking up 18.4% of monthly income. In September 2006, the average first-time buyer needs a mortgage £110,500 on a average salary of £34,216. This means first-time buyers in the UK in 2006 are spending 26.8% of their income on their average monthly mortgage repayments of £763.46.

It is also thought that the average couple now needs to save at least £29,000 to pay for the deposit and stamp duty on their first home.

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