Signs of first-time buyers being squeezed out of the market have started to appear, according to the latest Council of Mortgage Lenders (CML) market briefing.
The proportion of first-time buyers has been falling since the start of 2002 and is now 33% of the market, compared with 40% in May 2001. The report claimed that while inflation remains below target,and is likely to fall further in the next few months, the threat of inflation in the next two years is rising, leading the CML to believe rates will rise sooner rather than later.
Bernard Clarke, communications manager at the CML, said: ‘The factors that see first-time buyers being squeezed out of the market are house prices and the base rate. It may be that until price increases slow, higher rates will further squeeze these buyers, but the slowdown when it comes will enable them to save and catch up.’