"If mortgage rates reduce, this will help first-time buyers in the short term more so than election housing promises."
- Tim Bannister, property expert at Rightmove
The average first-time buyer mortgage payment has risen by 61% since the last election year of 2019, new data from Rightmove shows.
Over the last five years, the average mortgage payment for a typical first-time buyer home has risen from £667 per month to £1,075 per month.
The increase in average mortgage payments for first-time buyers has significantly outpaced wage growth, which is up by 27% over the same five-year period.
The calculations assume first-time buyers are taking out a five-year fixed mortgage, spread over 25 years, at 80% LTV. An 80% LTV mortgage is the average for first-time buyers, according to UK Finance data.
The average five-year fixed 80% LTV mortgage rate is now 5.09%, compared to 2.24% in 2019.
Meanwhile, the average first-time buyer home is now £227,757, rising by 19% since 2019, however prices have risen more sharply in different areas. At a regional level, the North West has seen the biggest jump in first-time buyer prices at 33% above 2019, while London has seen the smallest rise of just 6% in five years.
This is reflected in local trends, with 16 out of the top 20 areas across Great Britain that have seen the biggest jump in first-time buyer prices being located in the North West and Wales, though Bolsover in the West Midlands tops the list at a 55% rise in average asking prices.
Tim Bannister, property expert at Rightmove, commented: “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.”
