Fewer first-time homeowners seeking debt advice

| June 6, 2012
Fewer first-time homeowners seeking debt advice

The number of first-time homeowners in their twenties seeking help from the Credit Counselling Service (CCCS) fell to 3,008 in 2011, from 4,489 in 2009.

The charity, which assists people in financial difficulty by providing free debt advice, suggests this is due to low interest rates.

The Bank of England’s base rate has been at the record low level of 0.5% for three years, resulting in home owners benefiting from lower interest payments on their mortgages.

The average monthly mortgage payment for clients of the charity in their twenties fell from £543.92 in 2009 to £471.61 in 2011.

The CCCS also reported a fall in the number of twenty-something clients in mortgage arrears to 816, compared with 1,344 in 2009.

This group of home owners had a surplus of £63.42 in their household budget last year, compared with a deficit of £15.02 in 2009.

Delroy Corinaldi, director of external affairs at the CCCS, said: “While many young adults are struggling to get on the property ladder, the outlook is more positive for those that are already on it.

However, the financial situation is worsening for those living in rented accommodation, the CCCS warns.

The charity received 10,000 requests for help with rent arrears in 2011, 27 per cent more than the previous year, due to high rents and pressures on household incomes.

Tenants of private landlords experienced the most difficulty, with typical rent arrears of £924.

Across all types of rented accommodate, including housing association and council accommodation, the CCCS reported average rent arrears of £760.

Private sector rents increased substantially in 2011, with demand for rented accommodation outstripping supply.

Many potential first-time buyers have been forced to turn to renting instead, due to difficulty in raising a deposit for a mortgage and meeting stricter borrowing criteria.

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