First-time Buyers Face Steep Rise in Mortgage Costs

First-time buyers can expect to pay £400 more per month for mortgage than in 2019. This significant increase has been driven by rising house prices and mortgage rates. According to Rightmove, the average first-time buyer mortgage payment has risen by 61% since the last General Election year of 2019, from £667 to £1,075 per month.

The housing market has seen significant changes in recent years

Across Britain, first-time buyers now face paying £227,757 for a home - an amount which has jumped by nearly a fifth (19%) since 2019. Regionally, the north west of England has seen the largest percentage rise, with asking prices for first-time buyer homes jumping by a third (33%) since 2019. In contrast, London has seen the smallest percentage rise of just 6% over the past five years.

House prices have risen significantly in recent years

Rises in mortgage rates as well as house prices have also had an impact on monthly mortgage costs. According to Rightmove’s property expert, Tim Bannister, ‘as rates have increased over the last five years, the amount that a typical first-time buyer is paying each month on a mortgage has outstripped the pace of earning growth.’

Mortgage rates have increased significantly in recent years

Some first-time buyers 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. If mortgage rates reduce, this will help first-time buyers in the short-term more so than election housing promises.

Extending mortgage terms can help lower monthly payments

The findings were released as Zoopla found that building more affordable homes, tackling homelessness and rough sleeping and reducing the number of empty homes were ranked by people as the top housing priorities for the next government.

Building more affordable homes is a top priority for the next government

Rounding out the top five was helping first-time buyers onto the property ladder and controlling rent rises in the private sector. According to Richard Donnell, executive director at Zoopla, ‘British voters have high expectations from a new government on housing. The overarching response is: “Build more homes, but other things matter too”’.

Housing priorities vary based on position in the market

It is clear that voters are well aware of the pressures on the housing market with reducing homelessness and rough sleeping and doing more to reduce empty and under-utilised homes in the top three priorities.