Despite the huge increase in monthly costs, Rightmove estimates that average payments are still £155 lower than their peak in July 2023.
The latest research from Rightmove has revealed that 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, according to the data, the average payment is still £155 lower than the peak in 2023.
The analysis 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, affordability remains very stretched, which is why Rightmove has welcomed proposals from the mortgage regulator that they are considering responsible ways to enable first-time buyers to borrow more.
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.
This compares with the North East, where a typical first home is 1.8 times an average joint income at £132,854. The analysis also highlights the particular challenge for any first-time buyers trying to purchase a home on their own.
In more than half of regions, a first-time buyer on a typical salary would not be able to afford a typical first home on their own, if they were only able to borrow 4.5 times their salary, even if they’d saved up a 10% deposit.
The cheapest locations for first-time buyers
For those who may be considering lower-priced areas that they can move to, Kilmarnock has been named the cheapest area for a first-time buyer to get onto the property ladder.
The average asking price for a typical first-time buyer home in Kilmarnock, Ayrshire is £84,325. Greenock in Inverclyde is second on the list at £88,862, and Grimsby in Lincolnshire is third at £93,427.
“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," says Rightmove’s mortgage expert Matt Smith.
"Another measure of affordability which is restricting some first-time buyers from getting onto the ladder is how much they can borrow," he adds, "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.”