"The factors which contribute to buyer affordability are improving, and if we see further Bank Rate reductions this year, followed by mortgage rate drops, this could spur more buyers on during the second half of this year"
- Colleen Babcock - Rightmove
The average monthly mortgage payment for first-time buyers is now £909, almost £100 lower than at this point last year, according to new analysis from Rightmove.
Ahead of the Bank of England’s interest rate decision at 12:00pm on Thursday, the property platform reports that average monthly payments have dropped by £93 year-on-year. This calculation is based on buyers with a 20% deposit purchasing a typical first-time buyer property, defined as homes with two bedrooms or fewer, and spreading the mortgage over 30 years.
One year ago, the average monthly mortgage payment stood at £1,002. The decrease reflects falling interest rates over the past 12 months.
The average two-year fixed mortgage rate for buyers with a 20% deposit has dropped from 5.21% to 4.38%. Similarly, the average five-year fixed rate has fallen from 4.91% to 4.52%.
Alongside the decline in mortgage rates, asking prices for typical first-time buyer homes have remained steady. The current average asking price is £227,466, compared with £227,924 a year ago. Over the same period, average earnings have risen by 5%, contributing to a slow improvement in affordability.
In London, where first-time buyer prices are highest, the monthly mortgage saving is more pronounced. Buyers in the capital are now saving around £240 per month compared with the same time last year. The average asking price for a typical first-time buyer property in London is £497,295.
While London remains the most expensive city for those entering the market, other high-priced locations include St. Albans and Cambridge. At the other end of the scale, the most affordable cities for first-time buyers are currently Aberdeen, Hull and Carlisle.
“Affordability is still playing a key role in market activity right now,” said Colleen Babcock, property expert at Rightmove. “The factors which contribute to buyer affordability are improving, and if we see further Bank Rate reductions this year, followed by mortgage rate drops, this could spur more buyers on during the second half of this year.”
