Five times income predicted for home loans

Posted 2007-12-20

In October Hometrack, a housing industry information provider and property analyst service, recorded the value of the average London house as being 5.08 times that of an individual’s typical earnings. This news could spell financial relief for homeowners recovering from holiday spending and desiring to have a little extra in their pockets at the start of the New Year. 

In many areas, such as Christchurch where individuals annually earn only a seventh of the average house prices, the drastic increase in property values now gives homeowners a distinct financial advantage over renters. 

As noted by Professor Steve Wilcox of the University of York, “Not too long ago there was little difference between the costs of buying and renting. But while house prices tripled in the years since 1994, private sector rents only increased in line with earnings.” 

Home owners now have access to home equity loans five times greater than their annual income, while renters are unable to tap into this new source of extra money. 

Further information collected by Hometrack showed house prices freezing in August with potential home equity loans being three times greater than similar loans offered in 1994. 

Homeowners are advised to obtain home equity loans at this peak time before any change in housing values endanger their maximum loan potential.

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