The number of first-time buyers getting mortgages reached a decade-low in 2023, dropping by one-fifth compared to the previous year.
Yorkshire Building Society's data shows that high house prices and rising interest rates are making it difficult for newcomers to step onto the property ladder. In 2023, around 290,000 first-time buyers managed to secure a home, down from 370,000 in 2022. Even though the overall buyer numbers decreased, first-time buyers made up a slightly larger share, accounting for 54% of all homebuyers in 2023, up from 53% in 2022.
All borrower types experienced reduced activity due to higher interest rates, cost of living, and expensive housing. However, first-time buyers may have it the hardest. Nationwide's recent data revealed that a typical first-time buyer with an average income and a 20% deposit could face a mortgage payment equivalent to 38% of their take-home pay, which is "well above the long-term average of 30%."
Despite the challenges, there's a silver lining for potential buyers. Financial experts predict interest rate cuts in 2024, potentially making mortgages more affordable. A recent development saw a five-year fixed-rate mortgage deal priced below 4%, the first since May. Brokers anticipate more cuts as financial institutions compete for customers in the approaching spring buying season.
As the market evolves, the focus remains on supporting first-time buyers. The calculations by Yorkshire Building Society are based on lending data up to September 2023, with estimates for the last months of the year following previous patterns. Despite the challenges, there's hope on the horizon for those aiming to buy their first home in 2024.