First-time buyer mortgage payments still over £350 more than five years ago

Love or Hate Rightmove
  • Ahead of the Autumn Budget, the latest data from Rightmove’s weekly mortgage tracker highlights that the average first-time buyer monthly mortgage payment is over £350 more than five years ago:
  • The average monthly mortgage payment for a typical first-time buyer is now £931, compared with £578 in 2019 – however, payments are still over £150 cheaper than the peak in 2023
  • The average monthly mortgage payment for a first-time buyer is up by 61% compared with five years ago, while the average asking price of a typical first-time buyer type property is up by 18% comparatively
  • First-time buyers are being stretched in different ways across Great Britain:
  • In London, the average asking price for a first home is nearly 5 times the average annual salary of two people, while in the North West, average mortgage payments are up by 75% versus 2019
  • While there have been positive steps towards improved first-time buyer affordability, Rightmove suggests a wider review of mortgage affordability criteria could help to unlock more options for first-time buyers

Ahead of the Autumn Budget, the latest mortgage snapshot from the UK’s biggest property website Rightmove reveals that the average first-time buyer mortgage payment is still over £350 more than five years ago.

Data from Rightmove’s weekly mortgage tracker shows that the average monthly mortgage payment for a typical first-time buyer is now £931, compared with £578 in 2019, a difference of £353. However, this is still more than £150 cheaper than the peak in July 2023.

The calculations are based on a first-time buyer being able to put down a deposit of 20% and spreading the cost of the mortgage over 30 years, on a home which has two-bedrooms or fewer.

The average 5-year fixed mortgage rate for someone with a 20% deposit is now 4.58%, compared with 2.13% in 2019, which has resulted in mortgage payments which are 61% higher than five years ago on average.

Meanwhile a typical first-time buyer home in Great Britain of two-bedrooms or fewer is now £227,570, compared with £192,221 in 2019, an increase of 18% by comparison.

First-time buyers are waiting longer to buy a home and spreading the cost of their mortgage out for longer. The average age of a first-time buyer is now 33 compared with 32 in 2019, while the average mortgage term for a first-time buyer is now 31 years, compared with 29 years in 2019, based on UK Finance data.

Rightmove’s regional analysis highlights how first-time buyers in different areas of Great Britain are being stretched.

In London, a typical starter home is now nearly five times the average annual salary of two people, the most of any region. This means that many first-time buyers may struggle to borrow enough to afford the home that they want, with lenders typically able to loan up to 4.5 times a combined income. Those looking to purchase on their own would find it even more difficult.

In the North West, the average monthly mortgage payment is up by 75% compared with five years ago, and the average asking price for a home is up by 29% over the same period, the highest increase of any region.

In Yorkshire & The Humber, the average monthly mortgage payment is up by 74% compared with five years ago, while the average wage in the region is up by 25% – the biggest gap in wage growth and average mortgage payment increase across Great Britain over the last five years.

The current affordability criteria set by the financial regulators includes a typical borrowing cap of 4.5 times a combined income, and a stressed rate test at around 9.0%. This is to ensure that movers don’t overstretch themselves and could still afford their mortgage payments if their circumstances change.

Lenders have their own policies within this regulatory framework, and positive steps have been made to look at how first-time buyer affordability can be improved. Rightmove suggests a wider review of mortgage affordability criteria could help to unlock greater first-time buyer affordability at scale responsibly.

Matt Smith, Rightmove’s mortgage expert says: “Market regulation has had its intended impact to help prevent people from overstretching themselves when taking out a mortgage. It also means that there are many people out there, particularly first-time buyers, who find themselves priced out of the home that they want because they can’t borrow enough or pass the stressed rate test. As our regional analysis shows, there are several hurdles for first-time buyers to clear, made more difficult with higher mortgage rates, and payments outpacing wage growth.

“Lenders, both new entrants to the market and major lenders, have looked at how they can work within the existing framework to provide more support to first-time buyers which has been really encouraging to see. We think there is the opportunity for the government to help unlock greater long-term affordability in a responsible way through a wider review of affordability criteria alongside the regulators and lenders.”

 

Tim Bannister, Rightmove’s property expert adds: “The improving market conditions compared with last year have led to a recovery in activity in the typical first-time buyer sector. We’re seeing more choice in this sector for would-be first-time buyers, and more potential buyers contacting agents versus last year. However, mortgage rates, while improved from the peak, are still high against recent norms. This has led to first-time buyers taking out longer terms, waiting longer to build up their deposit, and looking at cheaper areas to get onto the ladder. First-time buyer affordability remains stretched and any support that can help more to get onto the ladder would be welcome.”

Regional first-time buyer trends

 

Region Average asking price for a first-time buyer home Average monthly mortgage payment Monthly mortgage payment vs 2019 (£) Monthly mortgage payment vs 2019 (%)
East Midlands £192,588 £788 +£320 +68%
East of England £272,930 £1,117 +£397 +55%
London £502,098 £2,054 +£623 +44%
North East £135,736 £555 +£227 +69%
North West £175,804 £719 +£309 +75%
Scotland £139,901 £572 +£231 +68%
South East £293,438 £1,201 +£429 +56%
South West £255,427 £1,045 +£414 +66%
Great Britain £227,570 £931 +£353 +61%
Wales £184,992 £757 +£323 +75%
West Midlands £194,398 £795 +£320 +67%
Yorkshire and The Humber £177,488 £726 +£309 +74%

 

Rightmove’s weekly mortgage tracker

 

LTV

(loan to value)

 

Term

 

Average rate 8th October 2024 Lowest rate 8th October 2024 Average rate

a year ago

 

All

2 year fixed 4.87% 3.84% 5.92%
 

All

5 year fixed 4.55% 3.68% 5.43%

 

LTV

(loan to value)

 

Term

 

Average rate 8th October 2024 Lowest rate 8th October 2024 Average rate

a year ago

 

95%

 

2 year fixed 5.52% 5.22% 6.38%
 

95%

 

5 year fixed 5.19% 4.95% 5.82%
 

90%

 

2 year fixed 5.31% 4.85% 6.16%
 

90%

 

5 year fixed 4.83% 4.37% 5.63%

 

LTV

(loan to value)

 

Term

 

Average rate 8th October 2024 Lowest rate 8th October 2024 Average rate

a year ago

 

85%

 

2 year fixed 4.90% 4.39% 6.06%
 

85%

 

 

5 year fixed

 

4.57% 4.09% 5.51%
 

75%

 

 

2 year fixed

4.64% 4.04% 5.70%
 

75%

 

 

5 year fixed

 

4.35% 3.87% 5.23%
 

60%

 

 

2 year fixed

 

4.10% 3.84% 5.49%
 

60%

 

 

5 year fixed

3.88% 3.68% 5.01%

Rightmove

UK Property news updates shared directly from Rightmove PLC - the country's leading property portal.

You May Also Enjoy

Estate Agent Talk

Closing the gap on client relationships and recommendations

New research from iamproperty has highlighted the growing disconnect between what buyers and sellers want from their agent and what they experience, which could be killing recommendations from happy clients. iamproperty’s quarterly consumer survey revealed that only a third of respondents (32%)¹ would recommend their agent following their experience. With many agents relying on recommendations…
Read More
Estate Agent Talk

Northern Ireland to expect over 25,000 new home movers

Belfast-based estate agency John Minnis has revealed that Northern Ireland is to welcome an estimated 25,000- 30,000 new arrivals from the UK and Europe over the next five years, as migration to the region reaches its highest levels in more than a decade. Recent figures show that 11,700 people relocated from other parts of the…
Read More
Breaking News

Red tape and rising costs stifling new-build availability across the capital

The latest analysis from London estate agent, Benham and Reeves, has revealed how protracted building timelines are preventing the capital’s housebuilders from delivering the level of new-build housing stock required to meet demand, with new homes currently accounting for just 7.5% of all properties listed for sale across London. Benham and Reeves analysed the latest…
Read More
Estate Agent Talk

UK’s new wave of ‘second cities’ offers strongest yield growth for property investors

The latest research from West One Loans has found that whilst investors may continue to favour the nation’s key cities such as London, Birmingham, and Manchester, a new wave of ‘second cities’ is delivering the strongest growth in rental yields. These emerging markets are offering investors the chance to achieve attractive returns, driven by rising…
Read More
Estate Agent Talk

Decline in change of use further constricting housing supply

Jonathan Samuels, CEO of Octane Capital, believes that a decline in conversion projects could ultimately prevent the Government from hitting its ambitious housing delivery targets, as the firm’s latest analysis has revealed that the number of homes created through change of use has fallen sharply in the last five years. Octane Capital analysed official Government…
Read More
Rightmove logo
Breaking News

Annual price fall driven by south, which could be harder hit by rumoured property taxes

The average price of property coming to the market for sale rises by 0.4% (+£1,517) this month to £370,257. However, average new seller asking prices are now 0.1% below this time last year following several months of muted price growth The dip in annual prices is driven by London and the south, as the south…
Read More