Not only are first-time buyers attempting to scale barriers created by high mortgage rates and affordability challenges, but it would seem the homes in their price range are in short supply.
This is according to research by mortgage adviser Alexander Hall, which based its analysis on the fact the average first-time buyer home in Great Britain is currently £244,519.
This means the average first-time buyer would require a loan of £207,841 if they are able to accumulate a healthy 15% deposit of £36,678.
With the average rate for a first-time buyer mortgage now 4.57%, up from 4.38% a year ago, the monthly cost of repaying a mortgage now sits at £1,164 per month, Alexander Hall’s analysis showed.
This is a 7.3% annual jump equivalent to £79 per month.
But this is just one thing to consider for a first-time buyer. Further research by the mortgage adviser revealed it’s not just the cost of a deposit and the mortgage repayments which could prove problematic.
There is now ‘stiff competition’ securing a property in the first place.
Whilst there are around 436,839 properties currently listed for sale across Britain, only around a third (34%) are listed with an asking price at, or below, the average price paid by a first-time buyer.
Some areas have more options than others. Alexander Hall found while London was home to by far the highest average price paid by first-time buyers at £444,548, there is far more stock available to first-time buyers in the West Midlands, where 27% of homes currently listed for sale have an asking price at or below the average price paid by a first-time buyer (£214,955).
Stephanie Daley, director of partnerships at mortgage adviser, Alexander Hall, said: “Getting that first foot on the property ladder is no easy feat and today’s first-time buyers are facing a considerably tougher task than their predecessors, with the average price paid by a first-time buyer having increased by 52% over the last decade alone.
“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.”
How can first-time buyers improve their homebuying chances?
Moving to an area with a greater choice of homes at a lower price is one option for first-time buyers – but this isn’t always the most practical or suitable route.
Daley’s advice is to attempt to boost your deposit by saving that little bit extra. What’s more, waiting a bit longer whilst you increase your down payment may also have another benefit.
She said: “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.”
