The debt is starting to bite as I told you it would ;-) ....................
Rising house prices fuel "dangerous" debt levels Tue Apr 11, 2006 8:09 AM BST
By Lorna Bourke
LONDON (Citywire) - A slew of property data has highlighted the growing strain that the resurgent housing market is placing on first-time buyers and the wider economy.
One in 10 first-time buyers now use a bank loan or credit card to fund a typical deposit of 15,000 pounds, according to smartnewhomes.com, a property website. A fifth are resorting to a 100 percent mortgage with no deposit as the annual rate of house price inflation measured by Halifax more than doubled to 6.2 percent in the last quarter of 2005.
David Bexon, managing director of smartnewhomes.com, said: "New buyers now make up less than 25 percent of the market, having been edged out by spiralling house prices and limited supply of appropriate properties. The levels of debt that first-time buyers now have to take on to buy a home is dangerous."
Existing homeowners are also sinking into debt. Bank of England figures also released last week show that the level of mortgage equity withdrawn by homeowners surged to 11.8 billion pounds in the fourth quarter of last year, up from the average of 8.2 billion pounds over the previous four quarters. This is equivalent to 5.6 percent of post-tax household income.
Jim Cunningham, senior economist at the Council of Mortgage Lenders, said this was a "significant pick-up" from the average 4 percent quarterly level in the previous 12 months. He noted that real disposable income had been flat in the fourth quarter and that close-to-trend real spending growth had only been financed by a reduction in saving and an increase in mortgage equity withdrawal.............................