FTB's forced to triple their mortgage debt
By Damian Clarkson     31st August 2007

First-time buyers (FTBs) are taking on three times more debt compared to a decade ago, and are being further hampered by lenders charging record fees.

Mortgage site mform.co.uk says the average FTB now takes out a £120,500 mortgage, but in 1996 the figure was under £40,000. And one in five lenders are capitalising on their misery by linking the application fees to the size of the loan.

But that’s just the tip of the iceberg: Another survey by a price comparison site found that borrowers now face 51 different mortgage penalty charges, significantly more than on any other financial product. And with five new ones cropping up in the last year alone, we can surely expect that number to rise.

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Do they have a random fee generator?
Maybe this would be easier to swallow if the fees were for levied for justifiable reasons, but that just isn’t the case. To name but a few, consumers are charged for wanting a copy of title documents, changing the repayment method and (most outrageously) for not taking building insurance from the same provider.

Recognising that the problem was getting out of hand, the Financial Services Authority did make a token attempt to tackle it by clamping down on mortgage exit fees. But many lenders responded by simply reintroducing the fees under a different name, such as core fees.

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Bank of Mum & Dad to the rescue
With house prices (and fees) spiralling, many parents are now helping their little ones onto the ladder, spending £21,314 on average.

According to an Alliance & Leicester survey, over two-fifths of parents either plan on giving financial assistance to their first-time buyer offspring or have already done so. Over More than a third feel obliged to help out their children and fathers are especially prone to feeling guilty if they fail to provide assistance, the research found.

But not every child will be getting a free ride, with 10% of parents warning they will charge them rent in order to secure their own retirement.

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And finally, a glimmer of hope for FTBs
In other news, house price inflation is at its lowest level since March as decreased demand and the interest rate hikes appear to be taking hold.

"The expected slowing results from three main factors, each of which have been around for some time. First, weaker affordability, as house prices continue to grow more quickly than earnings; second the effect of higher interest rates and inflation on consumers' pockets; and third lower house price expectations," explains Nationwide chief economist Fionnuala Earley.

Article produced by EveryInvestor.co.uk