Young home owners worried about level of debt

This is higher than the average across all age groups, with 30 per cent of all home owners who had used some form of affordable financing to get on the property ladder saying they are concerned about their debt.

Nearly one quarter of young people who had relied on help said they were worried about being able to pay their mortgage off one day, one fifth say they are worried they may slip into negative equity if the value of their home declines and a similar proportion are worried about being able to keep up with their monthly mortgage payments in the long term.

The prospect of interest rates eventually rising was found to be a particular concern among the young, with 49 per cent of those who have had extra help to be able to afford their home saying they fear interest rate rises will make it harder for them to keep up with loan payments.

The report follows a string of studies which have pointed to house prices continuing to rise strongly, prompting speculation that the Bank of England may take further steps to calm the housing market.

A mortgage lending clampdown came into force in April, which means people face more rigorous checks to make sure they can afford their mortgage payments, both now and when interest rates start to increase.

Last week, Nationwide Building Society reported that UK house prices have reached a new all-time high in cash terms of £186,512 on average after leaping by 11.1 per cent in the space of 12 months.

Halifax reported that property values jumped by 3.9 per cent month-on-month in May, marking the strongest monthly increase it has seen since 2002.

Paula Higgins, chief executive of the HomeOwners Alliance, said young people are resorting to ''desperate measures'' to be able to jump on the ladder as house prices increase.

She said: ''This goes to show that the housing crisis is giving people a raw deal. Schemes to make homes more affordable in the short term do little to solve the fact that we need many more new homes, in the right place and at the right price.''

The research found some regional variations, with home owners living in the East more likely to have taken on a low interest rate mortgage or an interest-only mortgage, where the capital is only repaid when the mortgage term comes to an end, than people in the UK as a whole.

Home owners in Scotland were less likely to have extended their mortgage term beyond 25 years than UK home owners overall.

In Wales, 12 per cent of home owners said they had received cash help from friends or family to buy their home, which was slightly higher than the average across the survey at 11 per cent.

In the North, just nine per cent of home owners said they had received financial help from friends or family.

The research was carried out among more than 2,500 adults in March, of whom more than 1,600 owned their own home.

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