First-time buyers' average mortgage hits £125k record
The typical mortgage taken out by a first-time buyer across the UK reached a record high of £121,500 in April, banks and building societies have reported.
The Council of Mortgage Lenders (CML), whose figures go back 40 years, said the affordability of a loan by people taking their first step on the property ladder also "worsened fractionally", with this sector typically borrowing 3.42 times their gross income compared with a multiple of 3.41 in March.
First-time buyers took out 24,500 loans in April with a total value of £3.5bn, which marks a 52% upswing in loans in terms of their value and an increase of 6,600 in terms of the number of loans advanced compared with April 2013.
The findings could add fuel to concerns that some people are feeling under pressure as house prices surge to stretch their borrowing out of fear of missing their chance to get a foothold on the property ladder.
The CML said current low interest rates mean first-time buyers' payment burdens remain relatively low for now, with their mortgage repayments, including capital and interest, typically representing around 19.4% of their gross income.
And in parallel with the typical first-time buyer loan reaching a new peak, the average income of a first-time buyer household has jumped to the highest levels ever recorded for the second month in a row, with the new figure standing at £37,000, compared with an average of £35,704 in March.
At £121,500, the typical size of a mortgage being taken out by a first-time buyer has increased by £2,750 in the space of a month.
The new peak for first-time buyer loans was reached despite toughened lending rules which began in April, meaning mortgage applicants face being quizzed in more detail about their spending habits to determine whether they can truly afford their repayments.
Lenders also have to apply "stress tests" to make sure a borrower could still afford their home loan if interest rates rise.
In practice, lenders had been gearing up for the changes under the Mortgage Market Review in the weeks leading up to the new rules being implemented.
The CML's figures also show that some 28,700 mortgages worth £5.3bn were handed out to home movers in April, which is a 47% increase by value compared with April last year.