A comparison of economic data from 1996 and 2006 has revealed that the average house price has leapt from £64,692 in 1996, to £181,122, with the average mortgage for a home mover increasing by £77,500, to £127,500.
The comparative study also indicated that the average mortgage of a first-time buyer (FTB) was £110,500, with the monthly repayment as a percentage of gross monthly for FTBs income accounting for 26.8 per cent, up from 18.4 per cent in 1996.
Since 1996, the Bank of England Base Rate (BBR) has dropped by 1 per cent, with the mortgage standard variable rate (SVR) dropping to 6.75 per cent.
The monthly mortgage cost for FTBs rose from £264.84, to £763.46, with the monthly mortgage cost for home movers more than doubling from £337.70 to £880.91.
Since 1996 Mortgage Interest Relief At Source (MIRAS) tax relief has also been abolished.
Commenting on the findings, Andrew Hagger, spokesperson at Moneyfacts, said: “The net effect is that mortgage payments take a much bigger chunk of our income than they did in 1996. This statistic looks gloomy enough in its own right, but when you factor in additional increased expenses such as higher council tax and utility bills, it is no surprise that the UK is now faced with the current personal debt crisis.”
Peter O’Donovan, mortgage manager at Bestinvest said: “The figures show a marked leap. It shows why first-time buyers are finding it so hard to get onto the property market, although during this time peoples salaries have also increased. Nevertheless it remains a worry, that interest rates have dropped but house prices and the cost of monthly mortgage products have increased rapidly.”
