Future bright for first time buyers

Mortgage affordability for those looking to take their first steps onto the property ladder is at its 'most favourable' for 12 years, new research has suggested.

According to the latest annual Halifax First Time Buyer Review, the proportion of disposable earnings devoted to mortgage payments by a potential first time buyer stood at 27% in September 2010; the lowest since December 1998 and almost half the peak level witnessed in September 2007.

First time buyers have become steadily marginalised since the property crash of 2008 but this significant improvement in affordability over the past three years has been mainly driven by a combination of lower house prices and declining mortgage rates.

In 2010, 40% of local authority districts across the UK were 'affordable' for the average first time purchaser, a considerable improvement from 2007, when only 6% of areas were affordable, revealed Halifax.

Currently, the North East is the most affordable region in the UK for first time buyers, 83% of local authority districts here are affordable to first time buyers, more than in any other region.

"The 'noughties' were a difficult period for many looking to get onto the property ladder. The substantial rise in house prices over much of the decade prevented many potential first time buyers from entering the market, however, affordability has improved significantly over the past three years," commented Martin Ellis, Housing Economist at Halifax.

 "Whilst the tightening in lending criteria experienced across the mortgage industry since the onset of the credit crunch in 2007 deterred first-buyers from trying to secure mortgage finance, there are now encouraging signs of a modest improvement in mortgage availability."