Mortgage Ratios for First Time Buyers

The Table below shows how first time buyers have faced increased difficulties in buying houses. The ratio of House price to income multiples has steadily increased in the past two decades.

Mortgage Interest Payments as a % of income have increased in the past 11 years from 11% to 20% in Q3 of 2007.

However, interest payments as a % of income are still a long way off the 1990 peak of 27%. With house prices and interest rates set to fall, the ratio may have peaked in 2007.

Year Number of Loans £m
Mortgage Advance
 Income Income Multiple Interest Payments as % of Income
1974   197,500 1,291           
6,400
            2,916 2.18 16.3
1975   259,000 1,890           
7,200
            3,500 2.07 15.0
1976   315,500 2,542           
8,000
            4,000 1.99 14.3
1977   328,500 2,796           
8,376
            4,451 1.85 13.3
1978  . .  
.
 . . .
1979   320,200 3,623         
11,250
            6,000 1.86 15.5
1980   314,400 4,071         
13,000
            7,392 1.73 18.4
1981   342,100 4,878         
14,542
            7,747 1.82 17.9
1982   433,800 6,496         
15,000
            8,040 1.83 16.8
1983   477,600 7,824         
16,000
            8,316 1.92 14.7
1984   531,300 9,876         
17,950
            9,028 1.99 16.8
1985   557,800 11,274         
19,112
            9,806 2.00 19.2
1986   612,700 14,421         
22,000
          10,669 2.10 17.8
1987   523,700 13,359         
23,000
          11,300 2.12 17.9
1988   580,300 17,645         
25,650
          12,500 2.22 18.5
1989   455,200 14,975         
29,000
          13,780 2.22 23.5
1990   409,200 15,237         
35,000
          15,500 2.31 27.1
1991   336,200 13,064         
36,480
          16,000 2.32 21.8
1992     447,600 17,463           
36,337
          16,120 2.31 17.5
1993   519,500 20,373         
36,000
          15,997 2.33 13.2
1994   532,100 21,323         
36,498
          16,120 2.34 12.0
1995   420,300 17,397         
38,000
          16,680 2.37 12.5
1996   465,300 20,263         
39,811
          17,308 2.36 11.2
1997   501,500 23,323         
41,800
          18,080 2.37 14.1
1998   525,200 26,791         
45,000
          19,600 2.38 15.0
1999   592,400 34,009         
49,000
          21,141 2.41 12.9
2000   500,200 30,203         
51,253
          22,018 2.42 14.3
2001   568,200 38,145         
56,950
          23,700 2.48 13.4
2002   531,800 43,138         
69,000
          26,644 2.67 12.2
2003   369,600 32,937         
76,412
          27,137 2.83 11.8
2004     358,100 36,266           
90,000
          29,270 3.03 15.0
2005   372,300 40,760         
98,940
          32,035 3.07 16.3
2006   404,300 48,950       
108,882
          33,766 3.23 16.8
2007 Q3    
118,845
35,549
 3.39 20.0

In the last quarter of 2007, the Income multiple had risen to 3.39, Advance was £118,000

The average (median) age of First Time Buyers is around 29-31

The increased difficulty of getting a mortgage for first time buyers has increased the attraction of unconventional mortgages

Source data: Council of Mortgage Lenders

 

First Time Buyers