2023 saw fewest first-time buyers in decade

THE number of first-time buyers purchasing a home with a mortgage is estimated to have fallen to its lowest in a decade in 2023.

Around 290,000 first-time buyers obtained a mortgage last year, according to the Yorkshire Building Society, down 21pc year on year.

This is the lowest number since 2013, when 260,000 joined the mortgage market. Would-be buyers are struggling to join the housing ladder due to soaring borrowing costs, while high inflation and record rent rises have made it harder to save for a deposit without financial help from family members. Prospective buyers are usually subject to tougher stress tests by lenders and many struggle to meet their affordability requirements.

The cost of an average fixed-rate mortgage has jumped from around 2pc to 5pc since the Bank of England began raising interest rates in December 2021 to combat rampant inflation.

The Bank has held interest rates in recent months, fuelling hopes that mortgage rates could start to ease this year. However, analysts warn that rates could now remain higher for longer.

More than 400,000 first-time buyers got a mortgage in 2021, taking advantage of cheap borrowing and temporary stamp duty relief. But that trend is now reversing due to cost of living pressures and high interest rates.

A record share of borrowers are taking out mortgages of more than 35 years to bring down monthly payments.

Meanwhile, almost half of new buyers in their 20s are reliant on cash gifts or loans to buy their first home, according to analysis by the Institute for Fiscal Studies.

Ben Merritt, at the Yorkshire Building Society, said: “First-time buyers are the lifeblood of the market and are still clearly keen to buy. The wider market relies on them.”