First-time buyers are being battered by a double-whammy as house prices and interest rates continue to rise, according to a new report by a leading mortgage lender.
Nationwide, Britain's biggest building society, has released research showing that some homebuyers may be spending almost £300 more a month than they would have on the same property last year.
Figures show that rising house prices alone have added around £75 to average monthly costs, while three interest rate rises will lift this figure even higher - to around £120.
"As interest rates have increased to their highest level in over five years, the question of affordability again raises its head. House prices alone increased by just over ten per cent in 2006 adding almost £14,000 to the cost of a typical first-time buyer property, but three interest rate rises in six months add considerably more to the borrowing costs for this already struggling group," commented Fionnuala Earley, chief economist at Nationwide.
"Compared to a first-time buyer entering the housing market in December 2005, a first-time buyer today would have to borrow more money, raise a larger deposit and pay higher interest rates than at this time last year."
The report found significant regional variability in the figures with new homebuyers in boom areas like Northern Ireland paying a staggering £2,000 more in fees and £230 a month more on repayments than at the end of 2005.
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