The number of mortgages awarded in the third quarter may have reached the highest level since 2007, but first time buyers may struggle to get onto the property ladder now and in the future.
Recent Council of Mortgage Lenders (CML) figures show that 188,000 mortgages worth £32.4 billion were arranged between July and September, but this is still some way off the 2007 peak of 223,900 home loan deals.
The devil is in the detail of the CML numbers, which show that the number of mortgages given to first time buyers fell for the second month in a row during September, possibly an influence of the Mortgage Market Review taking hold of the sector.
Tighter regulations has potentially led to young buyers being gradually squeezed out of the market again, with Moneyfacts revealing that people who put down smaller deposits are typically having to stump up an extra £2,800 `penalty` for doing so, due to worse rates.
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Despite having to pay thousands of pounds more than people with larger deposits, the CML reports that there were still close to 27,000 loans made to first time buyers during the third quarter of the year. The good news is that even though the August to September figure showed a fall in numbers, annually, they were up by a considerable amount.
However, this may not be a trend that continues into the years to come according to a study by the Higher Education Commission, which believes that now that university tuition fees can cost up to £9,000 a year, some middle class professionals may not be able to afford to buy due to their student debt.
The research shows that by the end of university, the average student will carry with them £44,000 of debt, which includes loans for living expenses. This is close to double the £25,000 that was the average under the old system.
With the Bank of England base rate due to increase at some point, the Higher Education Commission believes that many will be unable to repay their loans within 30 years.
The study concludes that the Commission is `deeply concerned the government may have created a loan payment system where, for example, a teacher is unable to secure a mortgage at the age of 35 because of the high level of monthly loan repayment`.
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