The world of becoming a home owner is becoming an increasingly distant prospect for those not yet on the housing market.
As reported in one of my previous articles the average house price has risen from 4.81 times the average national salary in 1997 to 8.41 times the average national salary in 2006, and this figure looks worse for the typical first time buyer in the 22-29 year age bracket where the average house price has risen from 5.45 times the average salary for this age group in 1997 to over ten times the rate for 2006.
Given this information there is little wonder that the coefficients used by mortgage lenders do not look anything like the way they used to. Once upon a time, three or three and a half times the applicants salary were the multiples that most banks and building societies would use to determine how much they were willing to lend.
Recent studies however have revealed that a number of lenders will now consider lending much higher multiples of an applicants salary. Indeed, the Daily Telegraph reported that lenders such as Royal Bank of Scotland, Northern Rock, and Alliance & Leicester were prepared to lend at this 6 times salary level under certain circumstances.
There is also talk of an almost certain interest rate in May due to soaring inflation, which means that those borrowing high multiples of their salaries are going to be in an even more difficult situation, as although some banks have made a genuine effort to make the housing market more accessible to first time buyers, there is still the small matter of making monthly payments.
One of the reasons why people are so keen to get onto the housing ladder is to avoid throwing money away into the bottomless pit, otherwise known as landlord’s pockets. However, perhaps one of the ways to help with spiralling interest payments is for homeowners to become landlords themselves.
Whilst opening your doors to complete strangers is not everybody’s cup of tea, there are ways to make the process less daunting with websites such as www.abodewithme.com who can help to introduce homeowners to potential candidates to rent a room in their home. After all, sharing your house not only brings in extra earnings to pay the mortgage through monthly rental, but house or flat mates can also make a contribution towards household bills and chores, and through, if the right house share candidates are found through housemate finding resources such as Abodewithme can even become friends.
