According to research by Alexander Hall, first-time buyer mortgage repayments for an interest-only mortgage have climbed 9.8% annually to £792 per month.
Both figures are assuming a 25-year term, an average property price and a 15% deposit.
The average first-time buyer property price sits at £244,519, an increase from £232,452 last year.
This means that a 15% deposit is currently £36,678, necessitating a mortgage loan of £207,841.
The average first-time buyer mortgage rate is 4.57%, up from 4.38% a year ago. This means that first-time buyer mortgage repayments have gone up by around £79 per month.
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Alexander Hall noted that it is not just the cost of saving a deposit and heightened mortgage rates that are a barrier to first-time buyers, but also the lack of affordable properties.
Only a third of properties are affordable for FTBs
In Great Britain, there are 436,839 properties listed for sale, but only 34% are listed with an asking price at or below the average price paid by a first-time buyer.
The North East has the highest proportion of affordable stock for first-time buyers, at 37%, followed by the East of England, East Midlands, and South East at 36%.
The West Midlands had the lowest proportion, at 27%, followed by Yorkshire and the Humber and Scotland, at 31%.
In London, around 34% of available properties are at or below the average first-time buyer asking price.
Today’s first-time buyers face ‘tougher task than predecessors’
Stephanie Daley, director of partnerships at Alexander Hall, said getting that first foot on the property ladder was “no easy feat”.
She said today’s first-time buyers are facing a “considerably tougher task than their predecessors”, noting that the average price paid by a first-time buyer has increased by 52% over the last decade.
“Not only does this mean they require a larger deposit in order to secure a mortgage, but their monthly mortgage repayments are higher as a result, with this cost being driven up even further as a result of higher mortgage rates versus a year ago,” Daley noted.
She said the “initial challenge” was finding a property “within the boundaries of affordability”, which the above research shows is a challenge.
“The good news is that we’ve already seen the Bank of England reduce interest rates already this year and, with more cuts expected to come, first-time buyers should start to benefit from easing mortgage rates.
“Our advice is, where possible, save that little bit extra when forming a mortgage deposit, as this will increase your property purchasing potential. It’s also well worth seeking the help of a top mortgage adviser, as they will ensure that you get the very best mortgage deal available to you, which can also help strengthen your position in the market and increase the potential number of homes available to you,” Daley said.
