First-time buyers look to cancel Netflix and Amazon Prime to save deposit
Seven in 10 prospective first-time buyers said they would cut spending on going out, followed by 55% who said they cut gas and electricity usage at home, according to Rightmove.
Just under half said they would spend less on holidays, and 48% said they would reduce the amount they spent on food.
Over a third said they could cancel subscription services such as Netflix and Amazon Prime.
The report added that the majority, 86%, would use savings to fund a deposit and only 16% said they would use a loan or gift from friends or family.
Rightmove added that first-time buyer demand was 26% down compared to last year, which it described as a “frenetic market”. It noted that despite economic challenges, demand was still three quarters of last year’s demand which was an “exceptional market” at 4% higher than 2019.
First-time buyers need average of five years to save deposit
Rightmove said that on average it takes five years for a first-time buyer to save a deposit, with the average monthly mortgage payment for a first-time buyer two-year fixed rate at 90% LTV coming to £1,324.
The firm said that this was 41% higher than average monthly rental payment of £940.
The average monthly mortgage payment for a novice buyer for a 75% LTV mortgage comes to £1,082, or 15% more than the equivalent average monthly rental payment, demonstrating the value of a bigger deposit.
Garden, parking space and lower energy costs top wish lists
The report revealed that a three-bedroom semi-detached house was the popular choice for first-time buyers when looking for a home outside London. Inside London two-bedroom flats were the most prevalent.
It added that first-time buyer wish lists for a property include a garden at 26%, parking space at 15% and lower energy costs at 14%.
However, experienced buyers were more likely to prioritise a garden and parking at 31% and 16% respectively.
They were also less likely to consider energy costs, with only 10% saying it was important to them.
First-time buyers were also more likely to prioritise having a spare room and space to work from home at 13% and 12% apiece. This compares to experienced buyers at 10% and 9% respectively.
Tim Bannister, Rightmove’s property expert, said that the “sudden nature” of mortgage rate increases means many have had to “very quickly reassess their position”.
He explained: “For example, those who already had a mortgage offer in place are trying to rush through their purchase to keep their lower rate. Many of those who had not yet secured an offer and found that the monthly repayments they would pay on a mortgage were a lot more expensive than planned, either had to budget for the extra costs, look for a cheaper property and borrow less, or pause their plans altogether.”
Bannister said that now mortgage rates had started to settle many first-time buyers hoped there were no surprises in today’s Autumn Statement and would want some “longer-term assurance and financial certainty”.
He added: “Despite the many significant challenges facing first-time buyers at the moment, the fact that demand in the sector is still above the last normal market of 2019 shows that there are many motivated first-time buyers right now who are still determined to get onto the ladder.
“For those without their deposit saved yet, the results of our first-time buyer study indicate that buying a first home remains very important to people. They are not being put off saving due to the current economic climate, and instead are making decisions in order to save as much as they can towards a deposit.”