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Mortgages too expensive for first time buyers

Date: 24 Jan 05

First time buyers are struggling to get a mortgage, according to new research.

Out of the 597 main postal towns, 548 or 92 per cent have now become unaffordable for the average first-timer.

The sharp decline in the number of first time buyers over the past two years means they are now at the lowest level since 1981.

Martin Ellis of Halifax, the lender behind the research, said: "Affordability has become a serious issue making it very difficult for those looking to get onto the housing ladder for the first time."

The report found that the average price paid by first time buyers increased by 16 per cent, from £112,541 in 2003 to £131,024 at the end of 2004.

Only three in ten new mortgages in 2004 were taken out by first time buyers - well below the longer-term average of almost one in two.

However, Mr Ellis believes there is still hope for first-timers.

He added: "We expect the situation to improve somewhat as earnings growth outstrips house price growth over the next few years."

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