"In 2024/25, over a third of first-time buyers had some assistance raising a deposit, either in the form of a gift or loan from family or friends, or through an inheritance"
- Andrew Harvey - Nationwide
Renters found it significantly easier to transition into homeownership over 2025 as mortgage costs fell and earnings outpaced house prices. The shift helped drive first-time buyer activity up around 20% compared to 2024, offering an escape route for those trapped in the private rental sector.
"With price growth well below the rate of earnings growth and a steady decline in mortgage rates, affordability constraints have eased somewhat over the past year, helping to underpin buyer demand," said Andrew Harvey, senior economist at Nationwide.
The proportion of first-time buyers in the market rose above the long-run average as lenders relaxed criteria. High loan-to-value mortgages (requiring deposits of 15% or less) reached their highest level in over a decade, making homeownership accessible to renters who previously struggled to save larger deposits.
"Indeed, the first-time buyer share of house purchase activity was above the long-run average, supported by easier credit availability, with the share of high loan-to-value lending (i.e. with a deposit of 15% or less) reaching its highest level for over a decade. First-time buyer activity over the last year was around 20% higher than 2024 levels," Harvey noted.
For prospective buyers earning the average UK income and purchasing a typical first-time buyer property with a 20% deposit, monthly mortgage payments now equal 32% of take-home pay. This sits slightly above the long-run average of 30% but remains substantially below the 1989 peak of 48%, when mortgage costs proved prohibitive for most renters.
The house price to earnings ratio improved to 4.7, continuing a downward trend from recent years. The ratio now sits slightly below its 20-year average, a significant development for renters trying to escape the private rental sector.
However, saving remains the biggest hurdle for tenants. A 10% deposit on a typical UK first-time buyer property costs around £23,000. For renters setting aside 10% of average net pay (roughly £320 monthly), accumulating this sum takes nearly six years. Recent rent increases make this saving challenge particularly acute for those in private rental accommodation.
"There has also been an improvement in the first-time buyer (FTB) house price to earnings ratio (HPER) to 4.7. This is a continuation of the trend seen over recent years, with the ratio now slightly below its 20-year average. Consequently, this suggests it is a little easier for prospective buyers to save for a deposit, although it is still particularly challenging for those in the private rented sector, given rental increases in recent years," Harvey explained.
Regional variations create vastly different timelines for renters hoping to buy. A 10% deposit in London exceeds three times the equivalent in the North. Londoners need nine years to save their deposit versus around four years for renters in the North, based on saving 10% of average net pay.
Many renters still require external support to make the jump to homeownership. Over a third of first-time buyers in 2024/25 received assistance raising a deposit through gifts or loans from family and friends, or through inheritance.
"Consequently, a significant proportion of first-time buyers still have to draw on help from friends and family to raise a deposit. In 2024/25, over a third of first-time buyers had some assistance raising a deposit, either in the form of a gift or loan from family or friends, or through an inheritance," Harvey said.
Nationwide expects the trend to continue, with housing market activity strengthening further as affordability improves gradually through income growth outpacing house price growth and interest rates declining modestly.
Service workers find homeownership increasingly within reach
Renters in caring, leisure and other service occupations saw the biggest affordability improvements, benefiting from higher earnings growth. This group, often locked out of homeownership in previous years, now finds buying more achievable.
Mortgage payments relative to take-home pay remain lowest for those in managerial and professional roles, where average earnings tend to be higher. All occupations saw affordability improve since 2024.
Challenges persist for renters in sales and customer service roles and those in elementary occupations, including construction and manufacturing labourers, cleaners and couriers. For these groups, typical mortgage payments would consume around 50% of average take-home pay, making the transition from renting to buying extremely difficult.
"Affordability is most challenging for those working in sales and customer service roles and for those classified as 'elementary occupations', which include construction and manufacturing labourers, cleaners and couriers. In these groups, typical mortgage payments would represent around 50% of average take-home pay," Harvey noted.
The affordability gap reflects earnings divergence by occupation. Managers, directors and senior officials typically take home around twice as much per year as those in administrative and secretarial roles.
Northern renters find easiest path to ownership
All parts of the UK except Northern Ireland saw continued affordability improvement over the past year when measuring typical mortgage servicing costs as a share of take-home pay, offering renters across most regions a clearer route to homeownership.
Northern Ireland experienced deteriorating affordability due to strong house price growth, making the transition from renting to buying more difficult. While mortgage payments as a share of take-home pay remain slightly lower than the UK average, they now sit noticeably above the region's long-run average.
London saw the largest affordability improvement for the second consecutive year, reflecting relatively weak house price growth in 2025, solid earnings growth and lower interest rates. Despite this progress, the capital remains the least affordable region by a significant margin, with many renters still priced out of the market.
"For the second year running, London saw the largest improvement in affordability, reflecting relatively weak house price growth in 2025, solid earnings growth and lower interest rates. Nevertheless, the capital remains the least affordable region by a significant margin (see chart above). Affordability pressures remain pronounced in the South of England, whilst in the North, Yorkshire & The Humber and Scotland, mortgage payments as a share of take-home pay are actually slightly below their long-run average," Harvey explained.
Renters in the North, Yorkshire and the Humber, and Scotland face the easiest transition to homeownership, with mortgage payments as a share of take-home pay falling slightly below long-run averages. Southern England continues to present challenges, with affordability pressures remaining pronounced.
Most regions recorded improved house price-to-earnings ratios compared to a year ago. London continues to have the highest ratio at 7.5, while Scotland has the lowest at 2.9.
The regional affordability variations create stark differences in who can realistically transition from renting to buying. Nationwide compared mean earnings for actual first-time buyers with regional average incomes.
London shows the greatest divergence. Actual first-time buyer earnings (for a single borrower) run around 45% higher than average incomes in the capital, meaning most renters on typical salaries remain locked out of homeownership.
In regions where affordability is less stretched, such as the Midlands, actual first-time buyer earnings align much closer to regional averages, making the jump from renting more achievable for typical workers.
Scotland offers the clearest path from renting to owning. The incomes of actual first-time buyers fall below the average regional income, indicating that homeownership remains accessible to renters on below-average earnings.
