The average monthly payment has increased by 61% since 2019, prompting borrowers to choose for smaller properties or longer loan periods.
Since the last general election, the monthly mortgage cost for first-time buyers has increased by more than 60%, now over £1,000 per month, illustrating the financial barriers for Britons seeking to own a property.
According to Rightmove data, the average mortgage payment for first-time buyers in Great Britain has climbed by 61% over the last five years, rising from £667 in 2019 to £1,075 per month.
The escalation of house prices and interest rates, which have significantly burdened borrowers, is responsible for this rise of approximately £400 a month. Meanwhile, average wages have only risen by 27% in the same timeframe. Consequently, many young borrowers are being compelled to either downsize their property choices or commit to ultra-long mortgages.
Tim Bannister, a Rightmove property expert, had the following to say:
The calculations assumed several factors: first-time buyers would provide a 20% down payment, secure a 25-year mortgage term, and opt for a five-year fixed-rate mortgage at the average interest rate.
The average price of a first-time buyer’s home in Great Britain has climbed to £227,757, marking a 19% increase since 2019. Regionally, the north-west experienced the largest surge in first-time buyer home prices, rising 33% since 2019 to £177,588. London remains the most expensive, with prices increasing by just 6% but now averaging £507,049.
Bannister is calling on the next administration to establish “well-thought-out policies” to help first-time buyers overcome the obstacles of saving for a large deposit and qualifying for a mortgage.
The party manifestos include several initiatives aimed at helping first-time buyers. The Conservatives plan to make the current £425,000 stamp duty threshold permanent for this group and promise an enhanced help-to-buy programme for those with smaller deposits. Labour proposes a “permanent, comprehensive mortgage guarantee scheme” to extend the current support for banks offering 95% home loans.
This comes just after the Bank of England kept interest rates at 5.25% for the seventh straight year, keeping borrowing costs high. According to the Resolution Foundation, millions of homeowners have faced significantly higher refinancing rates over the last 18 months, with a total cost expected to reach £12 billion by the end of the year.
A Bank of England survey revealed that 50% of investors expect a rate cut at the August monetary policy committee meeting, with 75% predicting a cut in September.
Furthermore, recent information suggests that average UK incomes fell slightly in May, the first drop since October 2023, as the labour market slowed ahead of the election. According to the Adzuna monthly jobs survey, the average advertised wage dropped to £38,765 in May, down £45, or 0.11%, from April. The number of job openings remained largely steady, at 854,248.
The Adzuna monthly jobs report says the following:
