First time mortgage payments up 61% since last election - Rightmove

24th Jun 2024 07:13

(Sharecast News) - First-time buyers have seen mortgage payments soar by nearly two thirds since the last general election, industry research showed on Monday.

According to property portal Rightmove, the typical monthly payment for a first-time buyer is £1,075 per month, 61% more than 2019's £667.

The average five-year fixed 80% loan to value mortgage rate has also rocketed, from 2.24% five years ago to 5.09%. An 80% LTV is the average for first-time buyers, according to trade body UK Finance.

In contrast, average wages have risen by 27% in the same period, Rightmove noted.

The average price of a typical first home is now £227,757, a 19% increase over the last five years, although Rightmove said prices had risen more sharply in different areas. The north west saw the biggest hike, up 33% over the five-year period, while London saw the smallest, ahead 6%.

Tim Bannister, Rightmove's property expert, said: "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.

"We hope that the next government can support first-time buyer 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."

Central banks around the world have hiked interest rates in recent years as they looked to tackle surging inflation.

The Bank of England has upped the cost of borrowing 14 times since December 2021, and it now stands at a 16-year high of 5.25%. The Bank left rates on hold on Thursday, but the next move is widely agreed to be a cut, although opinion is split over whether it will happen later this summer or in the autumn.

Inflation is now well off its peak of 11.1%, reached in October 2022, and this month fell to 2%, the BoE's long-term target.

However, core inflation - which strips out more volatile elements such as food and energy - is well above target at 3.5%, while services inflation remains stubbornly high.