


There are two possible explanations for this deviation. Either, there has been a shift in the occupational profile of people who become first time buyers. Instead of bus drivers and nurses, first time buyers are now accountants and lawyers. Alternatively, first time buyers have been inflating their incomes.
This little issue about the veracity of income declarations hasn't limited the generousity of banks. Since 2002, the average size of a first time buyer mortgage has almost doubled; from around £60,000 to almost £120,000.

Taking the four charts together, this looks like a nasty brew for the banks. First time buyers are beaten down by interest payments, their mortgages are huge multiples of their income, and they probably exaggerated their earnings anyway. Despite the growing evidence of first time buyers struggling, banks have simply increased the size of mortgages.
That is a recipe for a huge increase in mortgage defaults.
1 comment:
The observation re: wages is very odd. FTB have received higher wage increases than the rest of us. I doubt that somehow.
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