First-time buyers face £200 monthly cost hike

Average mortgage fees top £1050 as data shows substantial rise from 2022

First-time buyers with a 15% deposit to put down face paying nearly £200 per month more for a mortgage typically than they did a year ago, according to a property website.

Rightmove said those in this deposit bracket will pay an average of around £1,056 per month compared with £865 last year, due to mortgage rates and house prices rising.

However, it said this is lower than the £1,218 per month that a new first-time buyer would have paid last October, around the time some mortgage rates were peaking.

The analysis was based on the average asking price for a typical first-time buyer property, with two bedrooms or less, and the average rate for a five-year fixed, 85% loan-to-value (LTV) mortgage, with repayments being spread over 25 years.

Across Britain, the average asking price for a first-time buyer type property currently sits at a record of £224,963, according to Rightmove’s data.

However, the signs are that determined first-time buyers are still doing all they can to get on to the ladder despite economic challenges.

Rightmove said demand in the first-time buyer sector is currently 11% higher than in the “normal” pre-pandemic market of 2019.

Surging rental prices and signs that mortgage rates have been settling in recent months, following the market turmoil after last year’s mini-budget, are factors which could be helping to focus some wouldbe homeowners’ minds.

The average asking rent for a first-time buyer type property is £1,120 per month, having increased 11% compared with last year, the website added.

Rightmove’s mortgage expert Matt Smith said: “The combination of a new record price and higher mortgage rates than last year means it is challenge for first-time buyers.

“Our data indicates that first-time buyers who are able to raise their deposit are still finding buying compelling, with the number of people looking to move in this sector currently higher than the last more normal market of 2019.

“It was understandable that some buyers took a step back in the immediate aftermath of the mini-budget, particularly first-time buyers, as mortgage rates rapidly rose.

“Those looking to buy now may find that the average monthly mortgage payment on the home they are looking to buy is significantly less than they may have paid at the peak of rates in October.

“Now that rates are settling, would-be buyers planning a move may need to assess their individual circumstances and weigh up their affordability based on current rates, with the potential cost of waiting or paying rent for longer.”

Bank of England figures released this week showed an upward bounce in the number of mortgage approvals being made to home buyers in March.

The Bank’s money and credit report said mortgage approvals for house purchases “rose significantly”, to 52,000 in March from 44,100 in February.

However, it said the latest total remains below the monthly average for 2022 of 62,700.