An interesting study here, Mortgage Ratios for first time buyers
The main trends are:
- A rise in mortgage to incomes ratio from 1.86 in 1979 to 3.39 in 2007 Q3. There has been a faster increase since 1998 from 2.38 to 3.39, just 9 years later.
- Rise in Interest payments as a % of income. In the past 4 years the ratio of interest payments to income has increased from 11% to 20%. However, this is still lower than the ratio in the early 1990s. In the early 1990s when the UK was in the ERM and interest rates reached 15%, interest payments reached 27% of income.
With interest rates likely to fall next year, interest rate payments as a % of income should fall. Also if house prices do stagnate or fall, it will enable house price – income ratios to fall, making mortgages more affordable for first time buyers.
- First Time Buyers
- Guide to getting a mortgage for first time buyers
- Getting best mortgage on low income
See also:
Ratio of house prices to incomes
The best thing to do is get a fixed rate mortgage to start off with as this makes it easy for you to manage your costs on a month to month basis. Always search for a newmortgage provider to see if they can beat your deal and again get a fixed rate mortgage to last 2 to 5 years. Good luck.
Mortgage Guide UK is a great site and I found it so useful when researching my mortgage rates.