Rising interest rate hurts first time buyers

New research declares first time home buyers more likely to feel the brunt in the near future than buy-to-let investors.

The Royal Institution of Chartered Surveyors (RICS) conducted a survey which found first time buyers more likely not to keep up with mortgage payments than buy-to-let investors, who for the most part were older with larger disposable incomes.

They believe this latest interest rate rise will put some off their property search for now, whilst others (who are not on a fixed rate) will be squeezed for more money by their lenders again and sadly for some it will all be too much.

With UK interest rates at 5.25%(the highest they’ve been in five and a half years), and with more rises likely throughout 2007, buy-to-let investors are in a strong position. Rental demand is still holding firm and if house prices continue to rise, not everyone will be able to get their foot on that first rung on the property ladder, so therefore these people may in turn look to rent rather than to buy.

On the other hand, the Building Societies’ Association’s figures show that over half who entered the housing market as first time buyers have fixed rate loans. Therefore, it would appear that those trying to get in to the market will come across the problem of rising rates, however for those who have already signed up for fixed rate mortgages- they will remain unaffected.