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First-time buyer mortgage payments 61% higher since last election

First-time buyer mortgage payments 61% higher since last election
Shekina Tuahene
Written By:
Shekina Tuahene
Posted:
24/06/2024
Updated:
24/06/2024

The average first-time buyer monthly mortgage payment has risen from £667 to £1,075 since the last general election, analysis from a property listing firm showed.

This is based on a five-year fixed mortgage over 25 years at 80% loan to value (LTV), as found by Rightmove’s research. The firm said that according to UK Finance data, the average LTV mortgage held by a first-time buyer was 80%. 

Rightmove said the 61% increase has been due to mortgage rates rising over this period and remaining elevated. 

The average five-year fix at 80% LTV now has a rate of 5.09%, compared to 2.24% in 2019. 

The difference in mortgage payments has also outpaced the 27% growth in wages over the last five years. 

First-time buyer costs rise by a third in North West 

At the same time, the asking price of an average first-time buyer home has risen by 19% to £227,757, Rightmove’s analysis suggested. 

This was higher for people living in the North West of England, where asking prices for prospective homeowners increased 33% to £177,588, the sharpest rise recorded. 

This was followed by Yorkshire and the Humber, where there was a 30% jump to £178,871. 

Although property prices were highest in London, there was just a 6% increase in the average price of first-time buyer-type homes to £507,049. 

Rightmove said the next Government should focus on long-term solutions and policies to help first-time buyers get onto the property ladder, rather than short-term measures that only help certain people. 

Tim Bannister, property expert at Rightmove, said: “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. 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. We hope that the next Government can support first-time buyers 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.”