- First-time buyers’ mortgage payments up 61%
- Average monthly payment now £1,075
- Mortgage rates and house prices increased significantly
According to data, first-time buyers are paying £400 more monthly on mortgage repayments than before the last general election.
According to Rightmove, the average repayment has increased from £667 to £1,075 since Boris Johnson’s overwhelming victory in 2019. This represents a 61% increase over a period in which salaries increased by 27%.
It highlights the financial strain on individuals taking their first step onto the housing ladder, even as Rishi Sunak points to good GDP growth and falling inflation as proof that his plan is working.
Labour will surely seize on the data as it strives to undermine the Conservatives’ economic record, particularly under Mr Sunak’s predecessor, Liz Truss. Rightmove looked at the average five-year fixed 25-year mortgage cost with an 80 per cent loan-to-value ratio.
“Seize the opportunity: Sign up for Webull UK and receive free shares!”
The average rate for such mortgages has doubled since 2019, rising from 2.24 per cent to 5.09 per cent.
At the same time, the average price of a first-time buyer’s property has increased by 19% to £227,757. According to Rightmove’s Tim Bannister, as interest rates have risen over the last five years, the amount that a typical first-time buyer pays monthly on a mortgage has outpaced the earnings growth rate.
‘Some first-time buyers are considering extending their mortgage terms to 30 or 35 years to reduce monthly payments, or they are looking for cheaper properties for sale to borrow less.’
Lenders’ mortgage rates typically follow the predicted trend of the Bank of England rate. Rates have been raised since 2021 due to excessive inflation, mainly caused by the Ukraine war.
However, the most noteworthy increase in mortgage rates occurred due to market instability following Ms Truss’ mini-budget in the autumn of 2022.
Now that inflation has returned to its objective of 2%, the Bank appears to be on the verge of reducing interest rates, but it chose last week to keep them on hold for the time being.
