First-time buyers are stumping up less cash but paying more for their houses, new data shows.
The average first-time buyer’s house purchase price has risen 8 per cent over the last year and 6.5 per cent in the last three months, according to LSL Property Services.
The average first-time buyer is now paying £155,844 for a house as of July, according to LSL’s first-time buyer tracker.
Unsurprisingly with prices going up so fast, first-time buyers’ deposits are shrinking as a proportion of the total loan.
And even in real terms first-timers are putting up smaller deposits than they were last year, despite their incomes increasing from £35,843 a year ago to £37,000 today.
Twelve months ago, the average deposit represented 82.6 per cent of a first-time buyer’s income. In July 2014, that had fallen to 72 per cent.
Over the same period, the average first-time buyer loan-to-value ratio (LTV) has risen from 79.5 per cent to 82.9 per cent.
This is partly due to the government’s Help to Buy, which makes it easier to borrow with a smaller deposit.
LSL’s data also reveals the average first-time buyer deposit fell 10 per cent in a year, from £29,609 twelve months ago to £26,642 in June 2014 – a drop of almost £3,000.
Mortgage rates on the up for first-time buyers
The average first-time buyer’s mortgage rates also climbed for the fourth consecutive month in July, up from 3.99 per cent in March to 4.19 per cent in July.
In the last three months their rates have climbed 0.14 percentage points.
As a consequence, first-time buyer mortgage repayments are rising as a proportion of income. Over the last three months they have climbed from 21 per cent of a first-time buyer’s income to 22.6 per cent. A year ago, they represented just 20.2 per cent of a first-time buyer’s annual income.
The average first-time buyer purchase price topped £150,000 in five UK regions in the three months to July: London (£251,061); South East (£194,955); East of England (£173,550); South West (£155,484) and Wales (£152,970).
