First-time buyers in Britain are now paying, on average, £350 more per month for their mortgage than they would have done five years ago, new research by Rightmove has revealed.
A typical first-time buyer faces a monthly mortgage payment of £940, compared with just £590 per month in 2019. However, Rightmove noted that while costs have risen sharply over the years, they are still £155 lower than the peak seen in July 2023.
The property website conducted its analysis by looking at average asking prices for first-time buyer properties and mortgage rates. It assumed that first-time buyers were purchasing a home with two bedrooms or fewer, putting down a 20% deposit and spreading the mortgage payments over 30 years.
Currently, the average price for a typical first-time buyer home stands at £226,887.
Most affordable locations for first-time buyers
For those struggling to afford property in expensive areas, Rightmove identified the most affordable locations for first-time buyers across Britain.
Kilmarnock, in East Ayrshire, Scotland, was found to be the cheapest place for first-time buyers to get onto the property ladder, with an average asking price of £84,325.
Following closely behind were Greenock, Inverclyde, where the average asking price is £88,862, and Grimsby, Lincolnshire, where a first-time buyer can expect to pay around £93,427.
Other affordable areas include:
- Blackpool, Lancashire – £93,711
- Middlesbrough, Tees Valley – £95,473
- Hartlepool, Tees Valley – £99,525
- Paisley, Renfrewshire – £99,570
- East Kilbride, Glasgow – £100,814
- Ayr, Ayrshire – £101,391
- Burnley, Lancashire – £102,848
While some areas have seen prices remain steady or decline slightly, Hartlepool has experienced a significant rise in average asking prices, increasing by 10.7% year-on-year.
The impact of wage growth and mortgage affordability
Despite the increase in mortgage payments, wage growth has outpaced house price growth in recent years. According to Rightmove’s analysis, average earnings in the UK have risen by 30% over the past five years, whereas the price of a typical first-time buyer home has increased by 17% in the same period.
However, the rise in mortgage rates means that affordability remains a key concern for prospective homeowners. Even if buyers can meet the asking price of a property, they still need to consider how much they can afford in monthly mortgage payments.
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Regulatory changes could help first-time buyers
Matt Smith, mortgage expert at Rightmove, commented on the challenges facing first-time buyers:
“Higher mortgage rates mean home movers need to consider how much they can afford to pay each month on a mortgage, even if they can meet the asking price of a home.
“Another measure of affordability which is restricting some first-time buyers from getting onto the ladder is how much they can borrow. It’s encouraging to see that the regulator is considering how they may be able to enable first-time buyers to borrow more in a responsible way, as we think this will help to unlock more opportunity, particularly for those with smaller deposits.”
The Financial Conduct Authority (FCA) recently announced that it is reviewing mortgage rules, which could make it easier for buyers to secure a loan. If changes are introduced, they may help first-time buyers overcome affordability barriers and provide more flexibility when applying for a mortgage.
First-time buyers still facing challenges
Although wage growth and potential regulatory changes may help ease the strain on first-time buyers, the reality remains that purchasing a home in Britain is significantly more expensive than it was five years ago.
Higher interest rates, rising property prices, and increased living costs mean that getting onto the property ladder is still a major challenge for many.
For those looking to buy, affordability remains a key consideration, and prospective homeowners may need to explore lower-priced areas or take advantage of new mortgage schemes that could offer greater borrowing flexibility.
