In 1996 the average amount a first-time buyer had to borrow was only ?39,811 ? that's a 202% increase in eleven years.
The figures suggest that if the same growth rate is maintained, then by 2012 would-be house buyers will be looking for a first time buyer mortgage of over ?200,000.
In 2007, on a three times salary multiple, first time buyers need to be earning ?40,190. With current growth, by 2012 the chief earner would need to be earning ?66,806, meaning a 66% increase in earnings compared to today's requirement.
First time buyers are warned to look at the total outlay of their mortgage deal and take into account the mortgage rate and any fees and charges over the mortgage term.
It was only to be expected that the number of first-time buyers fell at its fastest rate for three years during July. They, along with all mortgage owners, will hope that interest rates have peaked as the Bank of England kept interest rates at 5.75% in October ? the same level it has been since a 0.25% increase in July.
First-time buyers and home movers received no relief from the burden of stamp duty in the Chancellor's Pre-Budget Report, leaving them frustrated again.
Previous pledges to help first-time buyers have been abandoned as there were no moves to alleviate the pain that stamp duty causes, especially for those getting a time buyer mortgage.
Rather than increasing stamp duty thresholds the Chancellor chose to increase inheritance tax allowances. For married couples this now amounts to a tax-free threshold of ?600,000.
Having following the Tory lead on inheritance tax, Chancellor Alistair Darling ignored their ideas on stamp duty, namely to scrap duty on properties worth less than ?250,000. The continuing rise of the price of houses means that more and more buyers are being dragged into the stamp duty trap, with the average price of a house for first-time buyers at ?167,000, and the zero-rate threshold for stamp duty way below that at ?125,000. Families paying more than ?250,000 for a house are hit by 3% stamp duty ? on the whole amount. Calculations recently published suggested that if stamp duty thresholds had kept pace with house price inflation then the 3% threshold for stamp duty would now start at ?729,000. Paying stamp duty on top of their deposit, together with their first time buyer mortgage is tough for would-be home owners.
Clare Hartnell, head of property at financial advisers Grant Thornton, said: ?Stamp duty is the best weapon the Government has at its disposal in helping people onto the property ladder and it is amazing that further help to first-time buyers has not been offered in the Chancellor's latest pre-budget report.?
Paul Chafer, of Stroud & Swindon Building Society, said: ?We expected great things from a potential review of housing taxes, yet once again there has been a missed opportunity to support the UK property market by reconsidering the stamp duty thresholds.?
