It can’t be denied that since the pandemic, the mortgage market in the UK has been through a rollercoaster of ups, downs, twists, and turns. What once was a thriving segment of first-time homebuyers, has since witnessed a significant decline, dropping by a fifth, as higher mortgage costs really take hold.
The Bank of England has hiked interest rates 14 times since the end of 2021 in an attempt to bring inflation under control, before finally coming to what seems like a pause at the end of September this year, to 5.25%. Could this finally mean that interest rates have hit their peak?
Fact, Figures and Current Trends of the UK Mortgage Market
First-time buyer numbers in the UK have ranged between 210,000 and 270,00 since 2015, apart from a dip due to the pandemic in 2020. Between January and August this year, however, the number of first-time buyers fell by 22%, to 186,015 compared to the same period last year.
Alongside this, analysis undertaken by Halifax found that the average buying age of first-time buyers has risen to 32 over the past decade, an increase in 2 years, and homes in need of renovation are now most in demand due to their lower price range. This brings home the fact that the UK is struggling with higher mortgage costs. Newly refurbished homes are currently 19% more expensive than the “fixer uppers”, that’s almost £70,000.
On the flip side, the UK has seen strong growth in earnings which has meant that buyers aren’t having to stretch themselves quite as much to afford a home. First-time buyers are now spending 5.1 times their wages on a house, compared to 5.8 in June last year.
First-Time Buyer Numbers by Region
The Southeast saw the biggest decline in first-time buyer numbers. They currently have the second most expensive property prices in the UK and saw their numbers drop by 25%, closely followed by London and East Anglia, which were down 24%. Scotland is currently the most affordable place to live, seeing its numbers fall by only 14%, with 9 out of 10 of the most affordable local authority districts falling within the Scottish border.
Why First-Time Buyer Mortgages are Vital
First-time buyers are still accountable for over half of all home loans agreed upon within the first 8 months of the year, showing just how important they are to our mortgage market. This year, first-time buyers have accounted for 53% of home loans, up until August, which was similar to last year, at 52%. After the lower cost of a renovation project, first-time buyers are then opting for homes with new boilers, double glazing, storage space, loft conversions, chain-free homes, and gardens.
First-Time Buyer Mortgage: The Deposit Debacle
There is a significant number of lenders out there aiming to help those trying to get on the property ladder with a first-time buyer mortgage, but the growth in house prices over the past decade has made raising a suitable deposit a very difficult step in the process.
That said, the amount of money put down on a first home is decreasing. 19% of the property price or £54,116 is currently the going rate, compared to 21%, or £31,060 in 2013. Unsurprisingly, London hosts the biggest deposit needed for first-time buyers, with an average of £113,078, while the north-east hosts the lowest, with an average of £29,184.
Some Welcome News on the Horizon
Halifax also found that house prices have dipped year on year by 2%, to £288,030, and with interest rates seemingly peaked, it is expected they will fall further this year, which is welcome news to many. Alongside this, strong income growth will hopefully offset higher interest rates.
How TaylorMade can Help with your First-Time Buyer Mortgage
If you are a first-time buyer looking to get your foot on the ladder in the midst of the mortgage market rollercoaster, speaking to a specialist mortgage adviser in Manchester, like our team here at TaylorMade, can help guide you in the right direction.
Our expert team of mortgage advisors can help you discover what to expect when buying your first home and alongside this, navigate your first-time buyer mortgage, including how much you can borrow and how much deposit you will need.
It is a very confusing landscape out there right now, but with the help of an independent mortgage broker in Manchester, applying for a first-time buyer mortgage can be pretty straightforward. We have access to the best deals on the market today, so contact TaylorMade, your expert mortgage advisor in Manchester now.
