And it is first-time buyers under 30 who are being squeezed hardest – just 34.5% of all first-time buyers in 2008 are under 30 compared with nearly 50% during 2007, analysis of applications through the online mortgage company show.
The extent of the squeeze is demonstrated by the average loan-to-values and average income multiples. In 2007 lenders allowed average LTVs of 85% compared with 77% this year.
Income multiples have fallen from 3.44 times income in 2007 to just over three times now with the result that first-time buyers now need average incomes of £41,600 compared with £34,000 last year despite recent house price falls.
Francis Ghiloni, mform.co.uk marketing and business development director, said: “The end of the housing market boom with house prices dropping ought to be good news for first-time buyers who can finally be in a position to afford the home that was out of reach.
“However with the mortgage market contracting lenders are getting tougher on how much they’ll lend and what level of deposit they’ll demand which means first-time buyers are yet to see much benefit from the house price slide.
“Availability remains the major issue for the mortgage market but the focus for borrowers should still be on the true cost of their loan taking into account all fees as well as the monthly payments.”
Average first-time buyer property bought through mform.co.uk this year cost £170,540 compared with £149,800 last year with average loans so far in 2008 around £127,000 compared with £117,000 in 2007.
