Struggle of Lower Earners in Housing Market On average, low-income first-time buyer households need to find savings equal to almost twice their annual income to meet affordability requirements, the banking and financial industry group said. High house prices and high mortgage rates impact affordability.

According to UK Finance, a first-time buyer with a total household income of less than her £50,000 puts down around 194% of her annual income as a down payment. For someone with an income of between £50,000 and her £100,000, this figure would be around 110%.

Struggle of Lower Earners in Housing Market UK Finance’s Q3 2023 Household Finance Review found that mortgage lending was weak across almost all market segments, but most significantly in the affordability sector. In 2021, 57% of first-time buyers had a household income of less than £50,000, according to the report. By 2023, this percentage will drop to 46%.

This review states: “These customers are now required to make deposits equal to twice their annual income, which is a significant increase from recent years.” “However, higher-income borrowers are less likely to face increased deposit requirements.” We haven’t seen a similar change.”

Struggle of Lower Earners in Housing Market Home purchase lending declined in the third quarter of 2023, continuing a trend that began in late 2022, with customers facing significant debt due to higher costs of living and higher interest rates. facing affordability constraints, the report said. First-time buyer activity was down by almost a fifth compared to the third quarter of 2022, and mover activity was down by a quarter.

Struggle of Lower Earners in Housing Market
Struggle of Lower Earners in Housing Market

Struggle of Lower Earners in Housing Market Mortgage refinances remain strong as affordability pressures and competitive lock-in agreements lead to 9 in 10 customers seeking to transfer products to their existing lender in 2023, reports states. The report further added: “Although there are limited signs of stress from unsecured debt, mortgage arrears are increasing. However, standards are low and around 99% of borrowers are still able to make their monthly payments.

“Difficult For those facing this, lenders offer a variety of support options that best suit their customers’ circumstances.It’s important to discuss these options early on to provide the right form of support. Jamie Alexander, Director of Mortgages at Alexander Southwell Mortgage Services, told the news page website:

Jamie Alexander, Director of Mortgage Loans at Alexander Southwell Mortgage Services, told News Page’s website: “While the resilience of mortgage refinances and low foreclosures are encouraging, given broader economic conditions,

Laura Suter, head of personal finance at AJ Bell, said: “The Bank of England appears to have halted its rate hike cycle, which has resulted in mortgage rates falling slightly. “Some homeowners may take comfort in that fact.” ”

“However, there remains a wide gap between current mortgage rates and the much lower fixed rates that many homeowners would benefit from.”

“About 1.6 million mortgage contracts remain. is due to end in 2024, and these homeowners will still be stuck paying hundreds, and often thousands, of dollars each year on their mortgages until the Bank of England confirms the significant reductions. It will be.”