New figures show that the typical first-time buyer's monthly mortgage payment has risen by 61 per cent since the last election year. The statistics, released by Rightmove, show that over the last five years, the average mortgage payment for a typical first-time buyer home has risen from £667 per month to £1,075 per month.
That represents a massive increase of £408 at a time when the cost of living has rapidly accelerated. According to ThisisMoney, much of the change happened in 2022, as the Bank of England increased interest rates to battle high inflation and the mortgages on offer became more expensive.
Mortgage rates have remained high ever since, with Liz Truss' disastrous mini-budget sending them spiralling even further. And with the Bank of England keeping interest rates at 5.25 per cent for the time being, it looks like a fall is not imminent.
That is despite inflation falling to the 2 per cent target for the first time since July 2021. Market predictions are only expecting minor cuts before the end of the year - if any. UK Finance data suggests that the average five-year fixed mortgage rate for someone buying with a 20 per cent deposit is now 5.09 per cent.
It stood at just 2.24 per cent in 2019. Over the same period, the cost of the average first-time home is now £227,757, which is up 19 per cent. Over the same five-year period, average wages are up by 27 per cent compared to 61 per cent increase in mortgage costs, suggesting that wage growth has not kept pace.
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The speed at which first-time buyer prices have risen is different across the country. The North West has seen the biggest jump in first-time buyer prices at 33 per cent above 2019 levels, while London has seen the smallest rise of just 6 per cent in five years.
Bolsover in Derbyshire takes top spot with an astonishing 55 per cent rise in average asking prices, while 16 out of the 20 areas that have seen the biggest jump in first-time buyer prices are located in the North West and Wales.
"Getting on the housing ladder is virtually impossible unless buyers have some assistance from the Bank of Mum and Dad or other family members due to the big gap between incomes and property prices," said Mark Harris, chief executive of mortgage broker SPF Private Clients. "The majority of first-time buyers we see have some help in the form of a cash deposit, a parent acting as a guarantor or buying together via a joint borrower sole proprietor mortgage.
"Recent research shows that first-time buyers are getting older and taking out longer mortgage terms because this is often the only option if you want to get on the housing ladder. Affordability is a huge concern for first-time buyers and is only going to get worse with rising rents and the high cost of living."
Tim Bannister, property expert at Rightmove, is urging the Bank of England to cut rates to ease the pressure on first-time buyers. He said: "As rates have increased over the last five years, the amount that a typical first-time buyer is paying each month on a mortgage has outstripped the pace of earning growth.
"Some first-time buyers are looking at extending their mortgage terms to 30 or 35 years to lower monthly payments, or looking at cheaper homes for sale so that they need to borrow less. If mortgage rates reduce, this will help first-time buyers in the short term more so than election housing promises."
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