Interest rate hikes mean repayment trouble for first-time home buyers

Interest rate hikes mean repayment trouble for first-time home buyers

According to a new survey conducted by online mortgage company mform.co.uk, just over 2 million young homeowners say they will have trouble repaying their mortgages at todaya��s interest rates. Even more – 2.66 million – claim it will be difficult for them to meet their mortgage payments if the Bank of England raises rates again by another quarter of a point. While interest rates are expected to hold steady this month, most analysts believe that the Banka��s Monetary Policy Committee will indeed hike rates again, to 5.75 percent, by August.

The chief executive of mfor.co.uk said that many first-time homebuyers are already spending most or all of their savings on a down payment. Even if they dona��t spend all of their money on a huge down payment, many take out loans for 100 percent of the price of their new home, which loans equal a large multiple of their income. First-time homebuyers are now spending 18.3 percent of their income on interest repayments on their mortgages. Last year at this time that proportion was 16 percent.


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