The average first-time buyer was paying 3.21 times their income to get a mortgage in June - the highest figure on record - according to new data from the Council of Mortgage Lenders (CML). This was up from 3.20 times the average income in May, and 3.06 times in the same month last year.
But, despite this rise, the number of first-time buyers taking out new loans went up by 14% - from 34,800 in May to 39,500 in June. This is the highest number of first-time buyers since December 2002 (44,000). As a percentage, first-time buyers accounted for 36% of all new loans - unchanged since April, but down by 2% on June 2005.
Today's survey also revealed a jump of 24% in the number of people taking out tracker loans. Tracker loans went up from 30,000 in May, to 38,800 in June, and accounted for 19% of all new loans.
Conversely, fixed-rate mortgage products declined slightly by 2% - from 143,200 loans in May, to 140,600 loans in June. Even so, fixed rate products still accounted for 68% of all new loans - up from 57% in the same month last year.
Commenting on today's new data, CML Director General Michael Coogan said:
"It is interesting to see that even though average first-time buyer income multiples are the highest on record, first-time buyers are still finding ways of getting on to the property ladder. It is highly likely that more and more young buyers are turning to parents and grandparents to help them raise the deposit for their first home."
"This month's jump in the number of people taking out tracker loans which follow the base rate is mainly due to their attractive pricing over recent months. But fixed-rate products still remain the dominant mortgage product for the majority of borrowers. This is encouraging, because it shows that many people are thinking of their financial future and locking themselves in to attractive rates in the short-to-medium term to ensure payment certainty."
