Affordability remains a challenge despite wage growth outpacing property prices
The average monthly mortgage payment for first-time buyers in the UK has increased by £350 over the past five years, according to a new analysis from property website Rightmove.
The report finds that a typical first-time buyer mortgage payment now stands at £940 per month, up from £590 in 2020. Despite a decline from the 2023 peak, when average payments were £155 higher, affordability remains a challenge for many prospective buyers.
The analysis is based on a scenario where a first-time buyer secures a 30-year mortgage with a 20% deposit.
While mortgage costs have risen, wage growth has outpaced the increase in property prices for this segment. Average earnings have risen by 30% over five years, compared to a 17% increase in the price of a typical first-time buyer home. This has slightly improved borrowing capacity, which is typically around 4.5 times a borrower’s income.
Rightmove noted that affordability remains stretched, highlighting recent proposals from regulators to explore ways for first-time buyers to access larger loans responsibly.
“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,” said Matt Smith (pictured), mortgage expert at Rightmove. “Another measure of affordability which is restricting some first-time buyers from getting onto the ladder is how much they can borrow.
“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.”
The report also underscores the challenges for single buyers. In more than half of UK regions, a single first-time buyer on an average income would struggle to afford a typical starter home, even with a 10% deposit and borrowing 4.5 times their salary.
In London, the average price of a first-time buyer property is £500,066 — equivalent to 6.8 times the national average wage for two people. In contrast, the North East remains the most affordable region, where a typical first home costs £132,854, or 1.8 times a joint average salary.
For buyers seeking lower-priced areas, Kilmarnock in Ayrshire has been identified as the most affordable location, with an average asking price of £84,325 for a first-time buyer property. Greenock in Inverclyde (£88,862) and Grimsby in Lincolnshire (£93,427) follow as the next most affordable areas.
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