Homes for first-time buyers are the least affordable they have been since 2008 due to increased mortgage rates having a major impact on housing affordability, according to new data from Nerdwallet.
Despite predictions of a fall in house prices in 2023, for an average first-time buyer with a 20% deposit and a mortgage rate of 5.5% payments will now make up roughly 39% of their take-home pay.
This is largely due to rapid increases in house prices over the last few years coupled with slow wage growth which has caused first-time buyers to turn to family and friends for help with a house deposit.
Tim Leonard, personal finance expert at NerdWallet, said:: “What for many was already a challenging task to get a mortgage as a first-time buyer is likely to be getting harder still.
“With the startling rate at which house prices are increasing, many will need to be saving an even larger house deposit, at the same time as the rising cost of living is increasing their outgoings elsewhere.
“It’s a difficult situation, but there may be some steps that can be taken to help people fulfil their homeownership dreams, even in the current financial climate.”
The cost-of-living crisis has had an impact on a reported 72% of potential first-time buyers, causing many to delay plans to purchase their first property to enable more time to build up their financial deposits.
