Rightmove data and comment following 0.5% interest rate rise
Tim Bannister, Rightmove’s Housing Expert, said: “Although the majority of people are on fixed rate mortgages, there’s a looming concern for those with their terms due to end over the next six months or so as interest rates continue to creep up. It’s likely that those who choose to fix again will find that rates have doubled in some cases since they last locked in, and so despite paying down some of their debt they could find their new monthly mortgage payments are higher, even if they’ve moved into a lower LTV bracket and have built up equity. They will now face the tough decision of moving to a tracker mortgage in the hope that interest rates drop again soon, or taking another fixed deal for a bit more certainty on their outgoings.”
Comment and stats about new first-time buyer impact:
- The average monthly mortgage payment for new first-time buyers will now rise to £1,112, based on the 0.5% rate rise, which will be 37% higher than January (when it was £812 per month)
- This equates to 42% of their gross average salary – the highest level since May 2012
- The current average mortgage rate for a 90% LTV two-year fixed mortgage is nearly 4%. It was last 4% or more in September 2014, and was 6% 10 years ago
- Demand for first-time buyer type properties is still up 27% compared with the pre-pandemic five year average, despite affordability challenges
- A 10% deposit on an average first-time buyer type home is now £22,409, which is 57% higher than ten years ago (£14,135)
- The average asking price of a first-time buyer home is now £224,091
- The latest data shows average gross monthly salaries have increased by 32% in ten years
Rightmove’s property expert, Tim Bannister said: “Despite interest rates rising, demand in both the first-time buyer sector and overall market is still up on the longer-term pre-pandemic average, signalling that many are adapting to changing rates in their plans and getting on with moves. Even with a seventh consecutive rise this takes average lender rates back towards where they were as recently as 2012-2014. The indication is that rates are set to rise even further into 2023. This sense that it’s going to become more expensive to borrow means that those thinking of buying for the first time may rush to fix now before rates rise further.”
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