UK first-time buyers are paying 41% more in monthly mortgage repayments than a decade ago, even though property prices have stayed broadly flat in real terms, according to new research from estate agency Yopa reported by PropertyWire.
In 2016, the average two-year fixed rate at 75% loan-to-value was 1.72%, producing monthly repayments of £600 over a 25-year term — equivalent to £860 in today’s money. The current average rate of 5.13% produces repayments of £1,213 a month, an extra £353 compared with the inflation-adjusted 2016 figure. By contrast, the average UK property price has actually fallen in real terms: £195,035 in 2016 (equivalent to £279,293 today) versus £273,037 now, making homes £6,256 cheaper in real terms than a decade ago.
“House prices have long been the focus of the affordability debate, but our research demonstrates just how significant an impact mortgage rates have on the actual cost of getting onto the property ladder,” said Yopa chief executive Verona Frankish. Separately, data from Moneyfacts shows borrowers with only a 5% or 10% deposit are facing average fixed rates above 6%.
Chancellor John Healey introduced a new first-time-buyer scheme in last month’s Budget, but it is restricted to new-build properties only, as the broader UK housing sales outlook weakens to a three-year low.
References
PropertyWire – First-Time Buyer Mortgage Costs Rise 41% in a Decade
