Getting onto the property ladder has always been challenging, but it’s currently the most expensive time to be first-time buyers (FTB) in over 70 years.
Managing Monthly Payments
Higher mortgage repayments are a significant barrier to homeownership. Between March 2022 and November 2023, the average mortgage rate for first-time buyers rose from 2.2% to 5.6%. To make monthly costs more affordable, many are opting for longer mortgage terms. In 2023, one-fifth of FTBs chose terms of 35 years or more, compared to fewer than one in ten the previous year.
Larger Deposits
Since 2005, the average home deposit has increased by 160%, driven by rising house prices and varying availability of high loan-to-value (LTV) mortgages. Today, the average FTB in the UK needs to put down £60,000, with regional variations from £144,000 in London to £27,000 in North East England.
Financial Support
Most FTBs require either above-average incomes or financial support from family or friends. In 2022-23, 37% received such support, up from 27% the previous year. Those on lower incomes, buying alone, or without family assistance are most likely to miss out on home ownership.
Older Renters
Due to these challenges, many hopeful homeowners remain in the private rented sector longer. Over the past two decades, the average age of an FTB has increased from 32 to 36.
Call for Change
The experiences of FTBs reflect the wider property market conditions. The UK hasn’t seen such low levels of outstanding mortgages since the late 1980s. Serious consideration is needed to make homeowning more affordable. With the General Election imminent, the Building Society Association suggests a new government should commit to housing policies that make homes more affordable, available, and suitable for modern needs.
Seek Advice
Navigating the property ladder can be overwhelming, but you don’t have to do it alone. We can help explore your options and make your homeowning dreams a reality. Get in touch for advice.
Your home may be repossessed if you do not keep up repayments on your mortgage.
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