Lenders have to assess whether or not you can afford a mortgage, and in recent years this has meant ‘stress-testing’. That’s not just how you react to the spectre of 3 or 4 prime ministers in the space of less than a year or a commute on the M25; it’s whether you’d be able to make your monthly repayments if interest rates went up still further. And there’s the problem for first-time buyers (and we’re probably talking under-40s, not under-30s now), your income has to be up to what might still happen, not just what is happening. Couple that with the need for a 15% deposit if you want an affordable rate, and you can see the extent to which they’re really up against it. With property prices as they are that is; so, something’s got to give, I’d say.
“Lloyds boss says business case for buy-to-let ‘really difficult'”
It’s changes in the rental market which will have the biggest effect on property prices in the next year or two. An obvious one is the rise in interest rates.