Press Release Summary: The Council of Mortgage Lenders says that the two recent quarter-point reductions in the base rate of interest should ease the pressure on first-time buyers.
Press Release Body: London (Online Unsecured loans) February 21, 2008: The affordability for first-time buyers should improve in 2008, says the Council of Mortgage Lenders. Last year, the first-time buyers' affordability fell to a 16-year low. They paid 19.4% of their income as mortgage interest in the last year - the highest since 1991 when it reached 21.8%.
However, the recent interest rate cuts should ease the pressure on the first time buyers looking to get a foot on the property ladder. The CML director-general Michael Coogan said: "Affordability has been stretched further in 2007, but the recent base rate cuts and the expectation of future cuts will ease debt servicing burdens in 2008. For first-time buyers, the combination of subdued house price inflation and lower mortgage rates means affordability should ease slowly as the year progresses."
Around 1.4 million people are likely to see their cheap home loan deals end in the early part of this year. Earlier, the estimates suggested that these people might have to pay an additional sum of 200 per month on an average to meet their cost of servicing the home loans. But, the recent cuts in interest rates will soften the impact of payment shock on a large numbers of borrowers.
The global repercussions of the U.S. sub-prime collapse adversely affected the credit availability in the UK in the later part of 2007. The interest rates soared on secured loans and home loans - unsecured personal loans were almost taken off the shelves by the lenders. The overall situation is likely to improve this year with the Bank of England taking initiatives to shore up the slowing economy.
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