First-time buyers borrow record sums

First time homebuyers are stretching their finances more than ever before to get a foot on the property ladder, a survey shows.

The Council of Mortgage Lenders said home loans to first time buyers in July were 3.24 times the average income, up from a multiple of 3.21 in June and the highest since records began in 1974.

The figures, which cover 98 percent of the mortgage market, also showed that first time buyers' monthly interest payments on their mortgages increased for the fourth consecutive month to 16.7 percent of their income in July.

The average first time buyer mortgage was 110,500 pounds in July compared with an average income of 34,216 pounds.

Stretched affordability has long been cited as an obstacle to Britain's property revival but has so far done little to curb the pace of price rises.

Government figures show house price inflation rose to a 14 month high in July and mortgage lenders Halifax and Nationwide reported strong price growth in August, despite higher UK interest rates.

First time buyers are continuing to find ways of getting a toehold on the property ladder, said CML Director General Michael Coogan. But higher income multiples, coupled with higher interest payments as a proportion of income suggests that they are continuing to stretch themselves to do so.