Interest rate hikes 'to hit first-time buyers'

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Interest rate hikes 'to hit first-time buyers'

Higher interest rates are expected to hit first-time buyers in the coming months causing many to fall behind on their mortgage repayments.

According to the Royal Institute of Chartered Surveyors (Rics) a great number of those buying property for the first time last year pushed themselves to their financial limits in order to do so.

But now after three hikes in interest rates in the past five months they could find themselves facing mortgage repayments they simply cannot afford.

Rics economist David Stubbs, said: "January's surprise interest rate rise is likely to soften new buyer enquiries in the coming months but those buyers who have already taken the housing market plunge could find mortgage companies knocking at their doors in the near future as affordability conditions bite."

Research from the Council of Mortgage Lenders (CML) shows that in November, after two rate hikes, first-time buyers were faced with the least affordable homes ever.

But this was before January's rise, which brought interest rates to 5.25 per cent and stretched affordability even further.

"Month-on-month we see affordability constraints becoming more pronounced for first-time buyers, and last week's interest rate rise will increase these pressures," said Michael Coogan, director general of the CML.

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