Accessibility worsens for first-time homebuyers

LONDON (Reuters) - Falling house prices have yet to make it any easier to get on the property ladder as lenders withdraw their best rates and demand higher deposits, a survey showed on Thursday.

The Royal Institution of Chartered Surveyors said prospective homebuyers had to fork out more than 100 percent of their take-home pay to cover the upfront costs of purchasing property in the second quarter.

That was up from 99.2 percent in the first quarter and only a fraction below the record high of 109.6 percent in the third quarter of 2004.

"The main driver of worsening accessibility is the renewed caution of lenders," the survey reported.

For those on the property ladder, affordability improved for the third consecutive quarter. Mortgage payments typically fell to 34.5 percent of homeowners' combined take-home pay, down from 37.2 percent in the first quarter.

Affordability pressures peaked in the third quarter of 2007 when mortgage payments totalled 39.5 percent of combined take-home pay.

"Although lower loan-to-value ratios are a barrier to some getting on the market, it does mean that those who do so have a lower debt burden," the survey noted.

House prices have fallen by around eight percent in the past eight months, after a decade in which prices trebled.

At the height of the housing boom, lenders were scrambling over themselves to lend money, often offering 100 percent mortgages and five times income.