New quarterly index highlights long-term buying advantage despite persistent affordability barriers
First-time buyers stand to gain significantly by purchasing rather than renting over the long term, according to the inaugural Tembo First-Time Buyer Index, published by mortgage and savings platform Tembo.
The quarterly index, which draws on proprietary Tembo data alongside official figures, shows that first-time buyers are on average £7,600 better off after one year and £64,000 better off after five years, compared with those who continue renting and invest their deposit elsewhere.
The findings also point to the considerable obstacles still facing prospective buyers, including rising deposit requirements, stretched borrowing ratios, and pronounced regional disparities.
Falling mortgage rates have provided some short-term relief despite flat income growth. The average first-time buyer mortgage rate has declined to 4.48%, its lowest in more than two years, bringing monthly repayments below 30% of income for the third consecutive quarter.
Upfront costs remain a significant barrier, however. Saving for a deposit now typically takes over a decade for many buyers at modest saving rates. In addition, the index finds that 80% of first-time buyers enter the market carrying existing debt, with an average loan balance of £9,277 prior to purchase.
The index identifies substantial differences in outcomes across cities. Glasgow ranks as the most favourable location for first-time buyers, combining lower borrowing requirements with strong house price growth. Buyers there would be £122,872 better off over five years compared with renting.
London ranks lowest, where rent accounts for more than half of average income (51%) and loan-to-income ratios reach 8.3.
More affordable cities such as Hull, Derby, and Stoke present lower entry barriers, while higher-growth cities including Manchester, Bristol, and Edinburgh continue to attract buyers despite greater financial pressure.
"First-time buyers are facing one of the toughest markets in decades, with higher deposits, rising living costs and stretched borrowing requirements," said Richard Dana, chief executive officer at Tembo. "But what this data shows clearly is that, over time, buying still significantly outperforms renting for most people.
"Trying to time the market perfectly is incredibly difficult. What matters more is getting on the ladder when you can and staying there."
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