A new study by Rightmove, the UK’s largest property website, reveals a staggering increase in mortgage payments for first-time buyers since the last election year of 2019. The average monthly payment has surged by 61%, highlighting the growing financial burden on new homeowners.
Dramatic Rise in Mortgage Payments
According to Rightmove’s research, the average mortgage payment for a first-time buyer home has risen from £667 per month in 2019 to £1,075 per month in 2024. This sharp increase is primarily due to rising mortgage rates, which have remained high over the past five years. The average five-year fixed mortgage rate for an 80% Loan-To-Value (LTV) has more than doubled, from 2.24% in 2019 to 5.09% today.
Wages Lag Behind
While mortgage payments have skyrocketed, wage growth has not kept pace. Over the same five-year period, average wages have only increased by 27%, significantly outstripped by the rise in housing costs. This disparity underscores the increasing difficulty for first-time buyers to afford homeownership.
Regional Variations in Home Prices
The study also highlights regional differences in the rise of first-time buyer home prices. The average price for a first-time buyer home in the UK is now £227,757, a 19% increase since 2019. However, some regions have seen even more significant jumps. The North West leads with a 33% increase, while London has experienced the smallest rise at 6%.
Local areas reflect this trend, with Bolsover in the West Midlands seeing the highest increase in average asking prices at 55%, followed by Merthyr Tydfil and Blaenau Gwent with 51% and 48% increases, respectively.
Impact of High Mortgage Rates
The rise in mortgage rates has greatly impacted first-time buyer affordability. Rightmove’s property expert, Tim Bannister, notes:
“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. Some first-time buyers are looking at extending their mortgage terms to 30 or 35 years to lower monthly payments, or looking at cheaper homes for sale so that they need to borrow less. If mortgage rates reduce, this will help first-time buyers in the short term more so than election housing promises.”
Hope for Future Rate Cuts
Rightmove suggests that a Bank of England rate cut would provide immediate relief for those trying to enter the housing market by potentially lowering mortgage rates. Bannister emphasizes the importance of long-term policies to support first-time buyers, including addressing the challenges of saving for a deposit and securing sufficient borrowing from lenders.
Regional Breakdown of First-Time Buyer Prices
Average First-Time Buyer Asking Price by Region (2024 vs 2019)
- East Midlands: £192,497 (+24%)
- East of England: £272,539 (+14%)
- London: £507,049 (+6%)
- North East: £131,809 (+22%)
- North West: £177,588 (+33%)
- Scotland: £139,198 (+22%)
- South East: £296,238 (+15%)
- South West: £256,687 (+24%)
- Great Britain: £227,757 (+19%)
- Wales: £180,458 (+28%)
- West Midlands: £193,957 (+24%)
- Yorkshire and The Humber: £178,871 (+30%)
Average First-Time Buyer Asking Price by Local Authority (2024 vs 2019)
- Bolsover: £151,697 (+55%)
- Merthyr Tydfil: £123,672 (+51%)
- Blaenau Gwent: £119,294 (+48%)
- Harlow: £320,640 (+47%)
- Powys: £197,014 (+46%)
- Rhondda Cynon Taf: £128,507 (+44%)
- Bolton: £139,729 (+42%)
- Hyndburn: £115,515 (+42%)
- Rochdale: £146,021 (+41%)
- Exeter: £268,654 (+41%)
- Oldham: £152,792 (+41%)
- Isle of Anglesey: £210,052 (+39%)
- Neath Port Talbot: £121,922 (+38%)
- Bury: £176,639 (+38%)
- Caerphilly: £151,704 (+37%)
- Pendle: £111,816 (+37%)
- Bridgend: £160,632 (+37%)
- East Lindsey: £174,380 (+36%)
- Rossendale: £144,656 (+36%)
- Wigan: £135,256 (+36%)
Conclusion
The significant increase in mortgage payments since the last election underscores the financial pressures faced by first-time buyers in the UK. While potential rate cuts by the Bank of England could offer some relief, long-term policies are essential to support new homeowners and address the affordability crisis.
