The figures showed affordability continued to be stretched in December, with first-time buyer (FTB) income multiples reaching a high of 3.31, with the proportion of income spent on servicing mortgage interest payments rising to 17.9 per cent.
However, over 2006 the number of mortgages to FTBs increased by 19 per cent while their value increased by 34 per cent. FTBs accounted for 36 per cent of all mortgages.
CML director-general, Michael Coogan, said: “The monthly figures clearly show the cumulative effects of the gradual worsening in affordability for FTBs. Although the mortgage market performed extremely well in 2006, the effect of rising interest rates and the continuing decline in affordability are likely to dampen market activity somewhat in 2007.”
Thomas Reeh, chief executive of blackandwhite.co.uk, commented: “What’s important to note is the number of transactions hasn’t really gone up, while lending has. It’s an important qualification. Still, it’s quite a staggering figure when you remember the factthat December is not a full working month. There was a lot of catching up to do in 2006, with a slow start and then the World Cup. There was a lot of pent up demand in the second half of the year.”
