Rental market set to stay strong as first time buyers pay more

New data from Rightmove indicates that first-time buyers are currently facing significant challenges, making many more likely to stay in the private rental sector. The average monthly mortgage payment on a first-time buyer property has increased by £350 over the past five years, reaching £940 compared to £590 in 2020, despite some improvements in the mortgage market.

While average wage growth (30% over five years) has slightly increased the borrowing power of first-time buyers, affordability remains a major issue. First-time buyers typically borrow an average of 4.5 times their single or joint income. In London, a typical first-time buyer property costs 6.8 times the national average wage of two people, whereas in the North East, it costs 1.8 times an average joint income.

Rightmove has welcomed proposals from the mortgage regulator to enable first-time buyers to borrow more responsibly. The analysis also highlights that a significant number of first-time buyers on a typical salary would not be able to afford a home on their own, even with a 10% deposit. For those considering lower-priced areas, Kilmarnock, Greenock, and Grimsby are named as the most affordable locations for first-time buyers.

Rightmove’s mortgage expert, Matt Smith, emphasizes the need for home-movers to consider their monthly mortgage affordability and welcomes potential regulatory changes to help first-time buyers with smaller deposits.