A new study by Rightmove shows that the average mortgage payment for first-time buyers has risen by 61% since the last election in 2019, from £667 to £1,075 per month. This increase has significantly outpaced wage growth, which has risen by 27% over the same period.
The study found that the average rate for a five-year fixed, 80% loan-to-value (LTV) mortgage is now 5.09%, compared to 2.24% in 2019.
The average first-time buyer home price has also increased by 19% since 2019, with the North West experiencing the highest increase at 33%.
Rightmove suggests that a Bank of England rate cut could have an immediate impact on mortgage rates, benefiting first-time buyers more than election housing promises.
Tim Bannister, Rightmove’s property expert, commented: “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.
“We hope that the next government can support first-time buyers with well-thought-out policies, which address the difficulties of saving up a large enough deposit and being able to borrow enough from a lender.”
Nathan Emerson, CEO of Propertymark, added: “Surging interest rates and inflation over the last few years have impacted the housing market with force.
“However, with the next general election now under two weeks away, Propertymark is keen to see targeted support for first-time buyers at the first opportunity from any incoming government.
“The potential of homeownership should never be a prospect that is ever out of reach for people.
“As inflation is now back within the range initially targeted, we are optimistic to see the base rate cut as soon as realistically possible, which would be very welcome news for people stepping onto the housing ladder when it does happen.”
