HOMEOWNERS in Wales are paying nearly twice as much in monthly mortgage repayments as they did five years ago, it can be revealed today.
New research shows the nation’s average monthly mortgage cost has rocketed from £201 to £465 since 2002.
Mortgage lenders last night spoke of the extent to which Welsh homeowners were being financially “squeezed” by rising mortgages.
The repayment figures for 2002 represented 13.4% of Wales’ average joint take-home income.
By last month, the proportion had risen to 18.8% of available household pay – which also constitutes an astonishing rise of almost 2% in just 12 months.
The highest average monthly repayments in Wales are being made in Cardiff North (£674), followed by Cynon Valley (£643) and Aberavon (£593), with Blaenau Gwent (£427) paying the least.
The jump in average mortgage payments in Wales has been revealed in regional research by the Woolwich Building Society, which examined the finances of hundreds of families across Wales.
The snapshot revealed an average take-home household income – a figure that covers the range from single homeowners to couples and homes where working sons and daughters contribute – of £2,478 per month.
It comes just as the International Monetary Fund warns that Britain risks the prospect of a US-style crash in house prices.
In its half-yearly health check of the global economy, the Washington-based IMF said the housing market in the UK was even more overpriced than that in America before its recent prolonged decline.
“Housing markets have boomed in a number of fast-growing countries – most notably Ireland, Spain and the UK – with rapid price rises and sharp increases in residential investment relative to GDP [Gross Domestic Product] exceeding even those observed during the US housing boom,” the fund said.
Andy Gray, head of Woolwich Mortgages, said, “Mortgage borrowers are really getting squeezed. Our research shows that the interest rate increases over the past 12 months are already starting to have a major impact on borrowers.”
But Andrew McDougall, retail manager for the building society, said it did not expect a crash.
He said, “We believe it will lead to a cooling off of the market not a dramatic fall. And that is exactly what the Bank of England wanted to achieve.”
Marlene Shalton, finance planner at Cardiff based financial advisers Chamber Morgan James, agreed with the analysis that a crash is not coming.
“I don’t think you can compare the housing and credit market here to the one in America,” she said.
“In Britain it still counts against you if do not have fixed employment, a low income or a rocky credit history.
“In the US people were getting away with some of those things and still obtaining credit for homes which led to the crisis there.
“My advice is that it still pays to get in on the housing market as soon as you can.
“But you must get in on the right level – in other words one you can afford and can still afford if the interest rate goes up.
“I think first-time buyers in particular also have to bear in mind that fees for mortgages have shot up of late. We are now talking thousands, very often – not hundreds – for paying fees on mortgage products.
“Some are tempted to put the cost of fees on mortgages but that means repayments are higher.”
The variety of mortgages on offer has slumped since the “sub prime” (borrowers with poor credit history) problems emerged in the US.
In the first six months of the year, the number of different home loans on offer increased by 22% but figures show that increase has been more than cancelled out in the three months since July. Northern Rock, for example, has slashed its 230-plus product range to just 70.
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