Mortgages for first time buyers have hit all-time highs, with pensioners taking flak for the rapid rise in house prices.

According to Howard Archer, economist of IHS Global Insight, some pensioners who have been able to access their pension funds may have used the money to invest in buy-to-let properties. Archer believes this may be responsible for the recent increase in house prices, and ultimately, the larger mortgages for first time buyers. However, the head of pensions at Hargreaves Lansdown, Tom McPhail, disagrees with Archer, saying that the average amount withdrawn from pension funds was around £15,000 and although some money may have been used to invest in property, it wasn’t sufficient to be responsible for the increased house prices.

Data released by the Council of Mortgage Lenders indicates that the average mortgage has increased by £2,125 since last year, with the average mortgage now being £128,000. The CML also reported that the buy-to-let market had also picked up. The figures also show that the amount loaned out to landlords for buy-to-let mortgages had increased by a third in July this year, in comparison to the same month last year. This follows the government’s announcement to allow those aged 55 or over to access their pension funds.

According to the Office for National Statistics, the average house price jumped by £5,000 in just one month. For first time buyers it is crucial that they seek professional advice from an adviser who has studied for their CeMAP course.

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