Interest payments reach 15-year high

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First-time buyers (FTBs) put the highest proportions of their earnings towards mortgage repayments for 15 years in April, a new report reveals.

FTBs paid 18.7 per cent of their income on mortgage interest during the month - up from 18.3 per cent in March and 16.3 per cent in April last year, figures from the Council of Mortgage Lenders (CML) reveal. The proportions paid by home movers - 16.3 per cent - also hit their highest level since 1992 last month.

Increasing numbers of FTBs were also forced to pay stamp duty - 58 per cent in April 2007 up from 51 per cent over the same period last year.

"Month on month we see affordability constraints for first-time buyers worsening. And with the impact of May's interest rate rise still to be felt, many borrowers face higher costs in the coming months," the CML's director general Michael Coogan said.

"The vast majority of borrowers will be able to absorb higher mortgage payments. But with two million fixed-rate loans coming to an end over the next year and a half, many borrowers should anticipate that their mortgage costs are likely to rise and should be planning ahead."

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