First-time Buyers

Costs rocket for first-time buyers

Costs rocket for first-time buyers
Christina Hoghton
Written By:
Christina Hoghton

First-time buyers' monthly mortgage payments have soared by £290 in the last two years, according to new data.

Broker Mojo Mortgages said that, in April 2022, the average mortgage rate for a first-time buyer was 2.68%.

It worked out that, for a typical property that costs £250,000 with a 10% deposit and a 30-year loan term, the monthly cost would be £910.

However, the same property (£250,000 with a 10% deposit) would now cost an average of £1,200 per month due to a higher average mortgage rate of 4.95%.

This represents an increase of £290 per month, which equates to:

  • £3,480 extra over a year
  • £6,960 extra over a two-year fixed rate mortgage
  • £10,440 extra over a three-year fixed rate mortgage
  • £17,400 extra over a five-year fixed rate mortgage

Spokesperson Claire Flynn said: “This may be unwelcome news to those currently saving a mortgage deposit. But there have been some reports of house prices falling due to rate rises impacting affordability. This may mean you can secure a property for a lower price than a few years ago.

“Remember, though, house price trends can vary significantly in different parts of the country. Keep an eye on local selling prices for the property types you’re interested in to see what you may be able to afford.

“And if you’re struggling to save a deposit for your first home, there are a number of schemes that may be helpful. A mortgage broker can help you investigate your options.”

Rising costs

Rightmove echoed the findings in its own research, saying that average costs for first-time buyers are up over the last 12 months.

It worked out that the average monthly mortgage payment on a typical first-time buyer-type property when taking out an average five-year fixed 85% LTV mortgage is now £1,121 per month, up from £1,065 per month a year ago.

Related: Revealed: The places where affordability has dropped like a stone