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Impact Of Credit Crunch 'Extending Beyond The Vulnerable'

Jan 3, 2008
Prospective first-time buyers are putting themselves under more financial pressure in an attempt to get on to the housing market, new research indicates.

In figures released by Moneyextra, the value of the average home purchased by such consumers has risen by three per cent to stand at 187,911 pounds. And with the typical first-time buyer mortgage now accounting for 133,943 pounds, the personal finance publication suggested that these people need some two years' average earnings just to be able to afford a deposit. Pointing to the annual figures from the Office for National Statistics, the average full-time salary over the course of a year is 24,000 pounds - meaning that a deposit of about 48,000 pounds is need for people wishing to take their first steps on the housing ladder. However, for those consumers who are attempting to raise sufficient funds to help put down a deposit, a quick loan may prove to be of use.

Further research from the firm also indicated that the typical house price has gone up by 2.3 per cent in the 12-month period leading up to November to stand at 227,484 pounds. However, it was suggested that this figure "conceals some sharp variations in the market sectors". Consumers looking to remortgage their home have seen the value of their property go up by 8.6 per cent during this time to 256,868 pounds. On the other hand, prices for people wishing to move house are reported to have "come down fractionally".

Commenting on the statistics, Robin Amlot, senior editor of Moneyextra, said: "The sharp rise in property values of those remortgaging may be an indicator of how the credit crunch is extending beyond the traditionally vulnerable sectors of society. At the same time we've also seen an increase of almost a fifth (18.8 per cent) in the average value of secured loans being sought over the last 12 months."

Mr Amlot pointed out that the typical secured loan now stands at some 31,578 pounds - an increase from the 26,584 pounds noted in November last year. The senior editor went on to suggest that prospects for next year's mortgage market are "fairly grim". He stated: "While interest rates appear certain to be significantly lower in 12 months' time we may have an uncomfortable journey getting there." Applying now for a cheap secured loan could therefore be an advisable idea for those who are particularly concerned about their ability to manage their money over 2008.

Indeed, a cheap loan could be a recommended means for many consumers to help afford the various expenses that come with purchasing a home. Whether prospective first-time buyers looking to free up money to afford a deposit or existing property owners aiming to reduce their overall expenditure so they make mortgage repayments, applying for a loan may be one means by which to get help with managing spending. A low-rate secured loan may prove to be of particular assistance for many after a study conducted by the Council of Mortgage Lenders (CML) earlier this year indicates that mortgage interest payment levels for first-time buyers reached 19.1 per cent in May, the highest figure noted since 1992. Meanwhile, existing homeowners were paying out some 16.6 per cent of their annual income towards mortgage costs, as the CML reports these people face "increased affordability constraints".
About the Author
Abbi Rouse writes for All About Loans. Visist us today to apply for cheap loans online, personal finance, and UK tenant loans.
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