Paula John: Market News

GOING UP...

Aspiring first-time buyers on modest incomes have to find more cash than ever to get on to the first rung of the housing ladder. A report from the Royal Institution of Chartered Surveyors warns that a first-time buyer couple with joint earnings of £27,516 after tax need to save over 100 per cent of their annual joint take-home pay to get together the £27,738 required for the initial costs of buying a typical home – including the deposit, fees and stamp duty. That is a dramatic leap since 1996, when a couple needed to save 21 per cent of their income to afford the costs of entering the housing market.

GOING DOWN...

Northern Rock is losing patience with borrowers who default on their mortgages, according to debt advice experts. Action for Debt says that the bank, which used to allow people to miss five or six months of payments before taking them to court is now typically starting legal proceedings after two missed payments. It claims that Northern Rock is unsympathetic when borrowers try to negotiate repayment deals. The mortgage bank is apparently set to double the number of staff it employs to recover debt, as the credit crisis continues to squeeze borrowers.

GO FIGURE... 500,000

Half a million homeowners put down a deposit of 10 per cent or less when they bought property in late 2006 and 2007, the Council of Mortgage Lenders has revealed. These borrowers now face a leap in their mortgage payments as they come off cheap two-year fixed-rate deals, and a fall in the value of their property. With little or no equity in your home, remortgaging to a reasonably-priced new deal is now nigh on impossible. Brokers are advising many people to stay on their existing lender's standard variable rate – advice which has hitherto been unheard of, as the SVR has always been the least competitive rate available.

Paula John is editor-in-chief of Your Mortgage