New first-time buyers are typically paying nearly £200 a month more on their mortgage than a year ago because of a combination of higher home loan rates and record asking prices for properties, new data shows.
The figures from property website Rightmove underline the challenging conditions facing those hoping to get on to the UK housing ladder, with separate figures this week indicating that house prices have resumed their upwards march at the same time that average rents are hitting fresh highs.
Rightmove said a typical new first-time buyer who was able to stump up a 15% deposit was now paying £1,056 a month, compared with the £865 the same individual would have paid a year ago – an extra £191 a month.
This is based on the average asking price for properties popular with first-time buyers, ie those with one or two bedrooms – which has climbed to a record level of £224,963 – combined with the average rate for a five-year fix, 85% loan-to-value mortgage spread over 25 years.
New fixed-rate deals had already started getting more expensive after interest rates began their upwards journey more than a year ago, but leapt up in the wake of last autumn’s disastrous mini-budget.
Since then, lenders have been gradually reducing the cost of their new fixed rates. The average new two-year fixed rate stood at 5.28% on Thursday, according to Moneyfactscompare.co.uk. The average new five-year fix stood at 4.97% at the start of this month but was 5% on Thursday.
However, there are best-buy deals available that are cheaper than that, for those who meet the criteria: this week, a number of five-year fixes were on sale with rates starting with a three.
This week brought evidence that the housing market may be continuing to defy those who had predicted a sharp downturn. On Tuesday, Nationwide building society said UK house prices rose by 0.5% in April after seven months of declines, suggesting there were “tentative signs of a recovery”. Some commentators have gone as far as to claim that Britain’s property market correction is already over.
It emerged on Thursday that UK mortgage approvals had risen in March to their highest since the aftermath of the mini-budget chaos.
Rightmove’s analysis was based on what it said was the average rate for a five-year, fixed-rate, 15% deposit mortgage: 4.44%. This is down from an average of 5.89% in October, but up from 2.76% this time last year.
It said that, to put its data into context, the figure of £1,056 a month was significantly lower than the £1,218 a month that a new first-time buyer would have paid on average when mortgage rates climbed to their peak in October.
The website said that, despite the difficult conditions, determined would-be first-time buyers appeared to still be doing all they could to get on to the ladder. Demand in the first-time buyer sector was currently 11% higher than in 2019. A “frenetic” private rental market was one of the key drivers for this determination from first-time buyers.
Mine was gonna be £730 a month until some cunt gazzumped me halfway through the process, which I didn’t think was too bad.
*edit: didn’t think the mortgage payments were too bad. The gazzumping has me absolutely livid.
Mine has doubled since last year. Anything I can do?
Prob still cheaper than what most people are paying in rent.
I’m looking to buy right now. I have more than enough for a deposit and have always been a frugal person; I’m also single and earn £25k in a high cost of living area. Living with my mum and sister is doable but I am 30 and want my own space, especially as my mum is retiring soon. Even cheap flats are out of my price range, partly because it would increase my transport costs from nothing to something. Multi-generation households are fine but our small homes are just not designed to accommodate that in most cases.
And prices have barely moved to reflect higher interest rates
Another scare story. And yet according to a report this week, mortgage lending from banks is currently at it’s highest level for years.
The house I’m buying (FTB) was vastly overpriced.
The bank undervalued it by £20k and my own survey valuation undervalued by £15k.
We were lucky that the vendor was happy to negotiate on price and we got it for £15k less than the asking price, we did have to cover the £5k difference in the valuations but were happy to do so because the house had been renovated to a very high standard.
What’s worse is, mortgage increases and inflated property values – we were looking at 3 bed semis in the north west which needed at least £50k spending on them to modernise and fix issues – it’s almost impossible to get a “doer upper” because estate agents are either really inflating prices or still trying to ride the COVID train. Which means if you get a run down house, you need to poor thousands into it to fix/modernise which means you’ll either need hefty savings or take out loans, further increasing costs and possibly being in negative equity from the get go.
We have a joint income of about £140k (we are both 30 years old) but even still the mortgage process was a *nightmare*, the amount of jumps we had to jump through considering our joint income for a mortgage of £225k was painful.
My mortgage cost (fixed just before it all hit the fan) would have gone up 80% if I’d tried to secure a mortgage on the same terms a few weeks later – from a reasonable £1,000pcm to £1,800pcm. Yikes. Now just counting down until the 5 year fix ends…
(This was at its absolute worst, of course, right when it all went to hell. I looked out of curiosity, but obviously didn’t shop around so that’s inflated. But the point stands – it was a bloody big jump even if it was half that!)
I’m on my renewal and mine has gone up £200, its crazy luckily I can afford it, will only hit savings.
Increase taxes a bit more to keep the masses happy and you’ll end up with everything owned by the 0.0001%.
Yep, I just remortgaged – bearing in mind that I’d paid off some in the meantime – mine has gone up almost exactly £200 on the smaller remainder.
I really feel for the younger generation.
Im 32 and my partner is 34. We both have jobs paying mid £30k.
We bought our house with a £25k deposit 4 years ago and are on 1.8% fixed for another 3 years. We pay £950 a month mortgage.
Same house, same street for sale at £130k more than we paid. If we had the same deposit and mortgage time we’d be paying £1,880 a month.
On top of that, although it’s an “ok” area in the midlands, we still smell weed around the back being smoked constantly and pretty much weekly us or one of our neighbours call the police about groups of youths riding dirt bikes on the road.
I can’t get my head around how anyone who isn’t on the property ladder can get in anymore. It’s ridiculous.
Imagine if they built houses for people to live in, instead of an asset for rich people 🤔
Now you know how renters feel when their tenancy runs out and they go to renew
On top of massive price rises. It was a frenzy at the beginning of the season this year.
Not to mention – round here anyway – any place that needs a renovation is bought by a builder then rented out once they’ve done it up and decorated it with cheap grey carpets which went out of style about 10 years ago.
ITT: “I managed to get an awesome 5 year fix before the rises, I’m so grateful”
OK hun don’t rub salt in our wounds
Possibly more mortgage pain ahead if the bank of England keeps going with their plan to end the FLS scheme this year. That would suddenly be a pretty big amount of money lenders need to find quickly, which they’ll only do with higher savings rates. Given the savings/mortgage margins are already squeezed expect higher mortgage rates. The bank should probably either wait another year or two to end fls, or end it slowly over a number of years but the bank hasn’t exactly been particularly effective or sensible this year so who knows.
I was looking to buy until this month I made an offer on a house earlier this month but withdrew it because the seller took close to two weeks to decide if they accepted it or not. Once I sent an email saying I was no longer interested the offer got accepted in a matter of hours.
Now I’m glad I got out, I was already close to the monthly limit I was comfortable paying, and for sure I would be hit with this price hike which would push me beyond it.
I think everyone who’s mortgaged or remortgaged is up nearly £200 a month in the last year!
What you all moaning about we get to celebrate the coronation of our King tomorrow? Makes it all worthwhile really just don’t think about anything else
21 comments
New first-time buyers are typically paying nearly £200 a month more on their mortgage than a year ago because of a combination of higher home loan rates and record asking prices for properties, new data shows.
The figures from property website Rightmove underline the challenging conditions facing those hoping to get on to the UK housing ladder, with separate figures this week indicating that house prices have resumed their upwards march at the same time that average rents are hitting fresh highs.
Rightmove said a typical new first-time buyer who was able to stump up a 15% deposit was now paying £1,056 a month, compared with the £865 the same individual would have paid a year ago – an extra £191 a month.
This is based on the average asking price for properties popular with first-time buyers, ie those with one or two bedrooms – which has climbed to a record level of £224,963 – combined with the average rate for a five-year fix, 85% loan-to-value mortgage spread over 25 years.
New fixed-rate deals had already started getting more expensive after interest rates began their upwards journey more than a year ago, but leapt up in the wake of last autumn’s disastrous mini-budget.
Since then, lenders have been gradually reducing the cost of their new fixed rates. The average new two-year fixed rate stood at 5.28% on Thursday, according to Moneyfactscompare.co.uk. The average new five-year fix stood at 4.97% at the start of this month but was 5% on Thursday.
However, there are best-buy deals available that are cheaper than that, for those who meet the criteria: this week, a number of five-year fixes were on sale with rates starting with a three.
This week brought evidence that the housing market may be continuing to defy those who had predicted a sharp downturn. On Tuesday, Nationwide building society said UK house prices rose by 0.5% in April after seven months of declines, suggesting there were “tentative signs of a recovery”. Some commentators have gone as far as to claim that Britain’s property market correction is already over.
It emerged on Thursday that UK mortgage approvals had risen in March to their highest since the aftermath of the mini-budget chaos.
Rightmove’s analysis was based on what it said was the average rate for a five-year, fixed-rate, 15% deposit mortgage: 4.44%. This is down from an average of 5.89% in October, but up from 2.76% this time last year.
It said that, to put its data into context, the figure of £1,056 a month was significantly lower than the £1,218 a month that a new first-time buyer would have paid on average when mortgage rates climbed to their peak in October.
The website said that, despite the difficult conditions, determined would-be first-time buyers appeared to still be doing all they could to get on to the ladder. Demand in the first-time buyer sector was currently 11% higher than in 2019. A “frenetic” private rental market was one of the key drivers for this determination from first-time buyers.
Mine was gonna be £730 a month until some cunt gazzumped me halfway through the process, which I didn’t think was too bad.
*edit: didn’t think the mortgage payments were too bad. The gazzumping has me absolutely livid.
Mine has doubled since last year. Anything I can do?
Prob still cheaper than what most people are paying in rent.
I’m looking to buy right now. I have more than enough for a deposit and have always been a frugal person; I’m also single and earn £25k in a high cost of living area. Living with my mum and sister is doable but I am 30 and want my own space, especially as my mum is retiring soon. Even cheap flats are out of my price range, partly because it would increase my transport costs from nothing to something. Multi-generation households are fine but our small homes are just not designed to accommodate that in most cases.
And prices have barely moved to reflect higher interest rates
Another scare story. And yet according to a report this week, mortgage lending from banks is currently at it’s highest level for years.
The house I’m buying (FTB) was vastly overpriced.
The bank undervalued it by £20k and my own survey valuation undervalued by £15k.
We were lucky that the vendor was happy to negotiate on price and we got it for £15k less than the asking price, we did have to cover the £5k difference in the valuations but were happy to do so because the house had been renovated to a very high standard.
What’s worse is, mortgage increases and inflated property values – we were looking at 3 bed semis in the north west which needed at least £50k spending on them to modernise and fix issues – it’s almost impossible to get a “doer upper” because estate agents are either really inflating prices or still trying to ride the COVID train. Which means if you get a run down house, you need to poor thousands into it to fix/modernise which means you’ll either need hefty savings or take out loans, further increasing costs and possibly being in negative equity from the get go.
We have a joint income of about £140k (we are both 30 years old) but even still the mortgage process was a *nightmare*, the amount of jumps we had to jump through considering our joint income for a mortgage of £225k was painful.
My mortgage cost (fixed just before it all hit the fan) would have gone up 80% if I’d tried to secure a mortgage on the same terms a few weeks later – from a reasonable £1,000pcm to £1,800pcm. Yikes. Now just counting down until the 5 year fix ends…
(This was at its absolute worst, of course, right when it all went to hell. I looked out of curiosity, but obviously didn’t shop around so that’s inflated. But the point stands – it was a bloody big jump even if it was half that!)
I’m on my renewal and mine has gone up £200, its crazy luckily I can afford it, will only hit savings.
Increase taxes a bit more to keep the masses happy and you’ll end up with everything owned by the 0.0001%.
Yep, I just remortgaged – bearing in mind that I’d paid off some in the meantime – mine has gone up almost exactly £200 on the smaller remainder.
I really feel for the younger generation.
Im 32 and my partner is 34. We both have jobs paying mid £30k.
We bought our house with a £25k deposit 4 years ago and are on 1.8% fixed for another 3 years. We pay £950 a month mortgage.
Same house, same street for sale at £130k more than we paid. If we had the same deposit and mortgage time we’d be paying £1,880 a month.
On top of that, although it’s an “ok” area in the midlands, we still smell weed around the back being smoked constantly and pretty much weekly us or one of our neighbours call the police about groups of youths riding dirt bikes on the road.
I can’t get my head around how anyone who isn’t on the property ladder can get in anymore. It’s ridiculous.
Imagine if they built houses for people to live in, instead of an asset for rich people 🤔
Now you know how renters feel when their tenancy runs out and they go to renew
On top of massive price rises. It was a frenzy at the beginning of the season this year.
Not to mention – round here anyway – any place that needs a renovation is bought by a builder then rented out once they’ve done it up and decorated it with cheap grey carpets which went out of style about 10 years ago.
ITT: “I managed to get an awesome 5 year fix before the rises, I’m so grateful”
OK hun don’t rub salt in our wounds
Possibly more mortgage pain ahead if the bank of England keeps going with their plan to end the FLS scheme this year. That would suddenly be a pretty big amount of money lenders need to find quickly, which they’ll only do with higher savings rates. Given the savings/mortgage margins are already squeezed expect higher mortgage rates. The bank should probably either wait another year or two to end fls, or end it slowly over a number of years but the bank hasn’t exactly been particularly effective or sensible this year so who knows.
I was looking to buy until this month I made an offer on a house earlier this month but withdrew it because the seller took close to two weeks to decide if they accepted it or not. Once I sent an email saying I was no longer interested the offer got accepted in a matter of hours.
Now I’m glad I got out, I was already close to the monthly limit I was comfortable paying, and for sure I would be hit with this price hike which would push me beyond it.
I think everyone who’s mortgaged or remortgaged is up nearly £200 a month in the last year!
What you all moaning about we get to celebrate the coronation of our King tomorrow? Makes it all worthwhile really just don’t think about anything else