Investors to squeeze out first-time buyers

Affordability levels in the housing market have reached their worst level since 1992 and buy-to-let investors are in a better position to cope with the pressures of the coming months than first-buyers, according to new research.

Only 0.69 per cent of buy-to-let investors' combined mortgages were in arrears this month, reports the Royal Institution of Chartered Surveyors (Rics).

Meanwhile, the CML reports that the average first-time buyer borrowed 3.29 times their income in November, up from 3.08 a year ago.

As buy-to-let investors tend to have higher disposable incomes and greater access to equity release, they will be better set to cope with ongoing affordability pressures.

Rics economist David Stubbs said: "Buy-to-let investors will be less at risk from repossessions in the coming months. Older, wiser investors are likely to ride out periods of interest rate rises looking to the benefits of long term capital growth rather than short term rental income.

He predicted: "January's surprise interest rate rise is likely to soften new buyer enquiries in the coming months but those buyers who have already taken the housing market plunge could find mortgage companies knocking at their doors in the near future as affordability conditions bite."