First time buyers paying 9 times their salaries for a home in London
The Nationwide has released a report to suggest that first time buyers are now having to spend record sums of money to buy a home in the capital. Buyers are now having to pay up to 9 times their annual income to get on the housing ladder. The figure has increased dramatically over the last decade.
In the 1990's buyers were only spending 3 times their annual salaries to buy a home but this has changed because prices have risen so dramatically. Although prices have increased it has never been more affordable to buy a home but that is ony because we have had a low interest rate environment which will not last forever.
Already many economists are concerned that we are getting addicted to cheap debt. The Bank of England has left interest rates at the record level of 0.5% and there is some concern that borrowers will have financial problems when the mortgage rates start to go up again. There was much speculation that this ws going to happen towards the end of last year but this did not materialise. According to many experts they are now betting on an interest rate increase towards the end of 2015 so we have a little way to go yet before loans become more expensive.