First-time buyers struggle as mortgage payments surge by £350 a month

First-time buyers face tough market conditions as mortgage payments surge, according to new data.

Research by Rightmove reveals first-time buyers are paying £350 more each month compared to five years ago.

The average monthly mortgage payment on a typical first-time buyer property, a two-bedroom or fewer home, is now £940 compared to £590 in 2020, despite improvements in the mortgage market from last year.

However, the average payment is still £155 lower than the peak in 2023.

More than half of regions remain unaffordable

The Rightmove data assumes a first-time buyer has been able to raise a 20% deposit and has opted to spread the cost of the mortgage over 30 years.

Average wage growth has outpaced the rise in average asking price for a typical first-time buyer property. Average earnings have grown by 30% in the last five years, versus a 17% increase in the price of a typical first-time buyer home.

This has slightly increased the borrowing power of first-time buyers, which is typically an average of 4.5 times a single or joint income from a mortgage lender.

However, for single first-time buyers, more than half of all regions remain unaffordable for those earning an average wage, even with a 10% deposit.

However, affordability still remains stretched for first-time buyers.  In London, an average first-time buyer type property is 6.8 times the national average wage of two people, now priced at £500,066.

First-time buyers to borrow more

Rightmove’s mortgage expert Matt Smith, welcomes proposals from the mortgage regulator that they are considering responsible ways to enable first-time buyers to borrow more.

He said: “Higher mortgage rates mean home-movers need to consider how much they can afford to pay each month on a monthly mortgage, even if they can meet the asking price of a home.

“Another measure of affordability which is restricting some first-time buyers from getting onto the ladder is how much they can borrow. It’s encouraging to see that the regulator is considering how they may be able to enable first-time buyers to borrow more in a responsible way, as we think this will help to unlock more opportunity, particularly for those with smaller deposits.”