First time buyer confidence hit

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First-time buyers' (FTBs) confidence has been hit by rising interest rates, according to Homeloan Management Ltd.

FTB confidence hit

First Time Buyer Confidence Hit

FTB confidence hit

12 April, 2007

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."