A new FTB study from Rightmove finds that over the past five years, the average mortgage payment for a typical first-time buyer home has increased from £667 per month to £1,075 per month, as average mortgage rates have increased and stayed higher
The average first-time buyer mortgage payment has increased by 61% since the last election year of 2019, according to new research.
A new first-time buyer study from Rightmove finds that over the past five years, the average mortgage payment for a typical first-time buyer home has increased from £667 per month to £1,075 per month, as average mortgage rates have increased and stayed higher.
The rise in average mortgage payments for FTBs has significantly surpassed wage growth. Over the same five-year period, average wages are 27% higher.
The mortgage payment calculations assume FTBs are taking out a five-year fixed mortgage, spread over 25 years, at 80% LTV. An 80% loan-to-value mortgage is the average for FTBs as per UK Finance data.
The average five-year fixed, 80% LTV mortgage rate is now 5.09%, compared to 2.24% in 2019.
Meanwhile, the average FTB home is now £227,757, increasing by 19% since 2019, nonetheless prices have increased more sharply in different areas. At a regional level, the North West has seen the biggest jump in FTB prices at 33% above 2019, while London has seen the smallest rise of just 6% in five years.
This is reflected in local trends, with 16 out of the top 20 areas across Great Britain that have seen the biggest jump in FTB prices being located in the North West and Wales, though Bolsover in the West Midlands tops the list at a 55% rise in average asking prices.
With the study highlighting how significant the rise in mortgage rates has been for FTB affordability, Rightmove suggests that a BoE rate cut will have the most immediate benefit for those trying to get onto the ladder, should it as expected lead to lower mortgage rates.
Rightmove’s key ask of the next government is that they prioritise long-term solutions and policies to help more FTBs onto the ladder, over short-term policies that only help very small groups of people.
Tim Bannister, Rightmove’s property expert, said: As rates have risen over the past five years, the amount that a typical FTB is paying each month on a mortgage has surpassed the pace of earning growth. Some FTBs are looking at extending their mortgage terms to 30 or 35 years to lower monthly payments, or looking at cheaper homes for sale so that they need to borrow less.
He added: If mortgage rates drop, this will help FTBs in the short term more so than election housing promises. We hope that the next government can support FTBs with well-thought out policies, which address the difficulties of saving up a large enough deposit and being able to borrow enough from a lender.
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