Research from Mform.co.uk reveals that more than 56% of people taking out a mortgage in the next three years will attempt to borrow three times their salary or more.
Mform.co.uk found that 29% of the UK’s adult population, around 13.89 million people, were hoping to take out a mortgage in the next three years. A breakdown of results reveals that just 3.33% of those taking a mortgage in the next three years can afford to borrow the equivalent of their salary.
A similar 3.33% are hoping to borrow in excess of six times their annual salary, a concept that would have been almost unheard of several years ago.
Most homebuyers are looking to borrow between two and four times their salary, according to the research, with 60%, or 8.3 million, of those hoping to take out a mortgage saying they would borrow this much.
Francis Ghiloni, from mform.co.uk, says: “The average UK property has increased dramatically in recent years, growing by 8.9% during the past 12 months alone. This rise means that many people now have to borrow more in order to buy their next property. Indeed, we estimate that the average mortgage holder now pays over £7,000 a year on their mortgage, a rise of over £2,000 since 2004.”
Problems with affordability have caused many lenders to offer five times salary products and the trend is set to continue. Last week, Gordon Brown announced a government strategy to improve affordability by building more homes, easing planning regulations and encouraging 25-year mortgages.
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