First-time buyers in Huddersfield were among the most likely in the UK to put down a small deposit when buying a home in 2013.
One in 14 first time buyers (7.2%) in the HD postcode buy homes with a 90-95% Loan To Value mortgage in 2013, one of the highest rates in the UK.
The figures, released through a Freedom of Information request to the Financial Conduct Authority, also show first time buyers in the HX postcode were 3.6 times more likely to take out a 95%+ LTV mortgage in 2013 compared to the rate for all local buyers, 0.3% compared to 0.08%, the biggest difference in the UK.
Across the Huddersfield postcode area, 3,453 households, including 2,224 first time buyers, bought with the riskiest high income multiple, high Loan To Value (LTV) loans, defined as a combination of borrowing 3.5 or more times a single income or 2.75 times a joint income and borrowing 90%+ of the home’s value, between 2005 and 2013. Of these 64, including 45 first time buyers, bought in 2013.
While these mortgages, which could leave homeowners at greater risk if interest rates rise or their income drops, are much less common than before the financial crisis, they were rising as a proportion of loans in 2012 and 2013, something that looks likely to continue with 2014’s rising prices and the availability of Help to Buy.
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Some of those who took out these loans will have been able to pay off some of their mortgage, or will have seen house price rises or pay increases that will have improved their financial situation; stagnant wages and falling house prices that are still yet to recover in much of the country could leave many under pressure.
Across the UK, more than 500,000 households who bought between 2005 and 2013 could be at risk, having taken out mortgages based high income multiples and high LTVs. Of these mortgages, nearly two-thirds, 65%, were taken out by first time buyers.
In 2007, 30.2% of all first time buyers bought with high income multiples and high LTVs, but by 2011 this had fallen to 1.7%. However, in 2013, this had doubled to 3.5%.
First time buyers were nearly two-and-a-half times more likely to take out these mortgages in 2013, with 3.5% of all first time buyer loans taken out at this level compared to 1.4% of all loans taken out.