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Housing ladder rung has broken

Thursday 1st May 2008

An independent mortgage broker claims that access to the housing ladder is not only out of reach, but that the lowest rung "has broken" for many Britons.

The knock-on effect of this is causing a stalling effect at higher levels, according to a John Charcol spokesperson.

Katie Tucker, technical manager at the broker, explains: "The lowest rung of the ladder has broken, unfortunately taking out the buyers that allow 2nd time movers to step up."

She argues that a large proportion of those who are now being refused mortgages for the purposes of buying a house are first-time buyers without much money to put towards a deposit.

Borrowers who have previously encountered difficulty with their credit and buy-to-let landlords looking to expand their portfolios could also face problems securing mortgages, she states.

Meanwhile, the increase in average pay packets over the past decade is unlikely to prove significant in easing monetary pressures on many consumers, according to Ms Tucker.

"Salaries have increased 53 per cent in the last ten years, but the average monthly mortgage payments have increased 172 per cent," she observes.

Her comments follow figures in the Nationwide house price survey which reveal a 1.1 per cent monthly drop in valuations.

This takes the annual trend into the red with a one per cent decrease, which John Charcol points out means properties have not increased in equity since this time last year, but have instead become worth less.

John Charcol recently argued that moves by the Bank of England to ease lenders liquidity problems would only offer slow relief to consumer borrowers.©

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