It is getting harder–not easier–for first time buyers

I’d like to quickly scotch this myth that softening in average fixed-rate mortgage rates means it’s now easier for first-time buyers to buy houses, which I hear the Treasury is now punting in the hope that journalists start to repeat it. Moneyfacts has joined the number of dotcom setups getting great publicity by saying the average fixed rate is 6.59%, only just above 6.56% it was in August 2007. This has allowed headlines such as “Mortgage rates back at 2007 levels”. But one must treat these figures with care. First, consider the deposit now required. The Council of Mortgage Lenders says the average laid down by first-time buyers soared to £17,300 in June – half the average first time buyer (FTB) salary. In August 2007 it was just £13,160. Next, the average mortgage rate charged to first time buyers was 5.93% in June, up from 5.73% a year ago. Only by putting these factors together do you have the full picture.