Commenting on the Council of Mortgage Lenders' (CML) latest mortgage data, Mark Smith, managing director of Homeloan Management Ltd, said: "The CML points out that record numbers of first-time buyers are taking fixed rate loans, but what is more worrying is that there are fewer first-time buyers than there have been for almost two years.
"Two things have happened. First, the climate of generally rising interest rates has scared off many would-be first-time buyers from entering the market. Second, the depleted number of first-time buyers who have taken the plunge are tending to choose fixed rate mortgage deals, since they are nervous about the likelihood of further increases in borrowing costs.
"This month I suspect we narrowly escaped another hike from the Monetary Policy Committee (MPC). It is a matter of confidence more than of affordability - first-time buyers' interest payments still only represent on average 18% of their income, hardly changed from last month. There is a clear dent in first-time buyers' confidence levels, which suggests to me that, from the housing market's point of view at least, interest rates have risen far enough."
