Falling interest rates could increase affordability for first time buyers

According to a recent report falling interest rates over the course of this year could see affordability improving for many first time buyers.

Interest rates have been one of a number of factors that reduced affordability for first time buyers to a sixteen year low recently, but this is a situation that may be starting to improve.

Figures and data from the Council of Mortgage Lenders shows that the percentage of income spent in mortgage interest last year by first time buyers was at its highest since 1991.

However, it is now thought that the two interest rate cuts that have already been applied, along with the expected future cuts, could help to ease this situation.

One industry official said: “Affordability has been stretched further in 2007, but the recent base rate cuts and the expectation of future cuts will ease debt servicing burdens in 2008. For first-time buyers, the combination of subdued house price inflation and lower mortgage rates means affordability should ease slowly as the year progresses.”

It is thought that consumers still waiting to get onto the property ladder could also benefit from the coming interest rate falls and house price falls, making it a little easier and more affordable for many consumers to get onto the property ladder.