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Mortgages falling short

Date: Mon, 04 Jul 2005

Holders of new mortgages found it difficult to afford a property last year, according to the latest figures.

The Council of Mortgage Lenders (CML) annual review of market developments in the UK found that house prices rose by 13 per cent in England and Northern Ireland.

As a result, the average amount borrowed rose to almost three times the buyer's income, compared to 2.8 times income in 2003. In some areas buyers were choosing 4 or even 5 x income mortgages.

However, Wales and Scotland were even worse hit, with respective rises of 28 per cent and 22 per cent.

The CML's deputy director general, Peter Williams, said: "What emerges is a picture of contrasting trends in local markets, but the over-arching theme is one of growing affordability problems."

The CML also revealed that all four countries saw a decline in the number of first-time buyers.

It comes after the last few weeks' announcements that first-time buyers are finding it increasingly difficult to get started on the property ladder.

Speaking about John Prescott's housing announcement, Mr Williams said it "provides some welcome encouragement for first-time buyers in England".

Yet, he also called for the government to raise the threshold for stamp duty in the forthcoming budget to help first-timers.

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