Money News
First-time buyers (FTBs) struggling to get on the property ladder are becoming increasingly prepared to take greater financial risks as the third interest rate rise in five months looks set to have only a minor impact on slowing rising house prices, according to Yorkshire Bank.
With house price inflation still running at around 9%, significant numbers are considering mortgages based on more than five times their salary. And home loans spread over more than 25 years - to make the monthly payments more manageable - are no longer scaring the majority - despite the resulting huge increase in the amount they'll have to ultimately pay back.
Only 20% of FTBs would shy away from a mortgage which took longer than 25 years to pay off, according to the bank's latest Housebuyers report. And just 39% would rule out a home loan which was five times their income.
The bank's research found that 28% of FTBs are so determined to buy sooner rather than later that they're prepared to offer above the asking price straight away on the house they want. This is up from 19% last January and significantly greater than the 12% of existing homeowners currently willing to pay over the asking price.
Meanwhile, parents with young children are so concerned that their offspring will still be living with them well into their thirties that they're starting funds now to try and help them buy their first home in years to come. To try get on to the property ladder, 26% of FTBs think they will have to join forces and buy with another family member. And 38% of FTBs would now take out an interest only mortgage to try keep their mortgage payments to a minimum in their first few years as a homeowner. A further 7% are planning to move a lodger in to help with payments.
29 January 2007 © Moneyextra.com
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