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Solo first-time buyers unable to afford three quarters of FTB properties

  • 03/11/2023
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Solo first-time buyers unable to afford three quarters of FTB properties
Single first-time buyers with an average salary and five per cent deposit would not be able to afford three quarters of typical first-time buyer properties on the market.

According to analysis of ONS data by Rightmove, typical first-time buyer market properties are studio flats and one or two-bedroom flats and houses.

The analysis assumes that a first-time buyer will have a maximum budget of £164,810, based on the ability to borrower £156,569 from a lender as they could borrower 4.5 times income on £34,793 and a deposit of £8,240.

The research noted that single first-time buyers in the capital were most impacted, only able to afford two per cent of studio, one or and two-bedroom properties.

This compares to 67 per cent of first-time buyers being able to afford properties in the North East.

Westminster, Islington and Camden topped the list for areas that first-time buyers would struggle to afford the most. On the flipside, West Dunbartonshire, Aberdeen City and North Lanarkshire were the most affordable areas.

Rightmove added that 95 per cent loan to value (LTV) mortgage rates were usually highest, with the lowest rate coming to 5.59 per cent.

It continued that assuming a maximum budget of £164,810, a buyer with a five per cent deposit would repay £970 per month over 25 years, compared with £818 per month for a buyer with a 15 per cent deposit.

If the mortgage term was extended to 35 years payments would fall to £850 per month with a five per cent deposit and £706 with a 15 per cent deposit.

Rightmove added that advertised rents were 10 per cent higher than last year for new tenants and average rents for studio, one or two-bedroom swallowed up 38 per cent of the average salary.

The firm said that the high rents made it “challenging” for those looking to move from the rental market to owning their first home.

Rightmove said that first-time buyers teaming up could afford 70 per cent of smaller properties across Great Britain with a five per cent deposit, due to the increased borrowing power.

The company said that reports of the mortgage guarantee scheme extension was welcome but it could only help a small proportion of people and more options should be considered, especially if they are buying solo.


Rightmove: Government help needed

Tim Bannister, Rightmove’s property expert, said: “Having enough affordable homes in the right places has been an ongoing challenge. It’s clear from our analysis that people trying to buy on their own on the average salary are likely to be priced out of the majority of homes without significant financial help from elsewhere.

“With the Autumn Statement fast approaching, the government is likely looking at multiple options and how they could help homemovers, and so we wanted to highlight that this group would particularly welcome any help or incentives.”

Matt Smith, Rightmove’s mortgage expert, added: “Any focus and support for those with the smallest deposits is always going to be welcome. However, in reality the mortgage guarantee scheme is only able to help a very small portion of movers, with the majority of first-time buyers preferring to get the affordability benefits of saving for a bigger deposit.

“If the scheme was cancelled then it may be seen as a disappointing outcome by some, but in reality it’s unlikely to have a significant impact on consumer choice, as many lenders are offering five per cent deposit deals outside of the government scheme.”

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