Market conditions are becoming still harsher for homebuyers, with first-timers handing over £7 of every £10 they earn to mortgage firms.
People getting on the property ladder at the moment are spending a higher proportion of their salaries on their home than at any time since the 1970s, new analysis shows.
Calculations from Citigroup, a US bank, show that when the cost of the deposit and a year's payments is added together, a buyer is handing over 69 percent of his or her income to a mortgage firm. This is the highest single ratio marked since 1974.
Tightening credit conditions from banks, which have seen lenders withdrawing cheap mortgage deals, raising rates and becoming much more selective about who they lend to, has been blamed for this trend.
Falling house prices have resulted from these credit restrictions, with the value of homes dropping by over eight percent, according to surveys. However, figures from Nationwide have shown that, despite these falls, the average lump-sum deposit required by lenders has increased from £13,160 last year to £17,300.
Meanwhile, further gloom has been provided by Globrix, a property website who researched the market on behalf of the Observer newspaper.
The firm said that home sellers in major cities such as Glasgow and Birmingham, as well as certain districts of London, have lowered their average asking prices by around £2,000 each.
Compare mortgages via money.co.uk
