First-Time Homebuyers in UK Face Greatest Hurdles in 70 Years

Homebuyers Brace For A Surge

In a report released on Monday, the Building Societies Association revealed that Britons aspiring to purchase their first home are encountering the most formidable conditions in seven decades.

The study highlights the dual challenges of exorbitant down payments and steep mortgage repayments, a predicament unlike previous generations who typically faced one or the other.

The Building Societies Association, representing nearly a quarter of all mortgage lending in the UK, underscores the unprecedented financial strain on first-time buyers.

High Costs and Mortgage Rates Present Barrier to Ownership

High Mortgage Rates In UK

According to the report, the typical first-time buyer must muster a down payment averaging £60,000 ($74,000), soaring to £144,000 ($178,000) in London, where familial assistance has become nearly indispensable.

Meanwhile, escalating mortgage rates have driven repayments back to levels reminiscent of the pre-global financial crisis era.

The report underscores the strain on prospective buyers, particularly since the turn of the century, as they contend with soaring property prices.

Office for National Statistics data reveals that while average earnings in England and Wales have risen by 70% since 2002, house prices have surged by 174%.

UK First Times Buyers Mortgage Costs Highest in 70 Years

Mortgage rates have exacerbated the challenge, with the average repayment surging since late 2021 amid efforts by central banks to curb inflation.

Former Prime Minister Liz Truss’s ill-fated “mini-budget” further fueled mortgage costs, triggering apprehension among bond traders over the nation’s fiscal sustainability.

Today, the average rate on a two-year fixed-rate mortgage stands at 5.82%, down from a peak of 6.85% in August last year but significantly higher than the 2.29% rate recorded in November 2021.

The BSA report underscores the mounting financial burden on first-time buyers, with mortgage repayments accounting for 22.5% of gross monthly income in November last year, up from 16.8% in March 2022.

London House Prices In 2022 Were 9.2 Times The Average Local Salary

As a result, a significant portion of the population remains entrenched in private rented accommodation, where residents are also grappling with soaring rents, marking the highest annual increase since 2015.

The BSA advocates for governmental recognition of the challenges faced by younger generations, particularly in housing, urging policies to support prospective first-time buyers.

Mousumi Routray is experienced content writer who helps businesses reach their audience through engaging content. She has written blog posts, articles, newsletters and more for companies in tech, entertainment and other industries.