New first-time buyers are typically saving £150 a month in mortgage payments compared to July last year, it has been revealed.
Falling interest rates means a buyer getting to the keys to their first home now is typically paying £949 a month, which is down from £1,096.
Lower mortgage rates have made it much more affordable to buy a property, which has resulted in a 20 percent surge in the number of people going through the doors of estate agents.
The figures come from property website Rightmove, who pointed out that the average 5-year fixed, 80 percent Loan-to-Value mortgage rate is now 4.76 percent – down from 6.12 percent in July 2023.
At the same time, some banks and building societies are boosting the loans on offer to first-time buyers by, for example, taking them up to 5.5 times income.
Rightmove’s figures are based on the typical first-time buyer (FTB) market sector covering properties with up to two bedrooms.
They assume the buyer has been able to save up a 20 percent deposit and is spreading the cost of the mortgage over 30 years. A typical FTB is now £227,191, compared with £225,552 in July 2023.
Rightmove said first-time buyers in London will see the biggest monthly cash savings compared with last year at £313 a month. This is a reflection of the fact that the typical FTB purchase price in the capital is an eye-watering £509,085.
Those in the South West will see the biggest proportional drop in monthly mortgage payments compared with last year, as it is the only region where FTB property asking prices at £252,158 are now lower than in July 2023.
Regional first-time buyer trends
Region
East Midlands £192,838
East of England £273,670
London
North East £133,581
North West £176,972 £739.39
Scotland £140,051
South East £294,605
South West £252,158
UK
Wales
West Midlands £194,448 £812.41 – £111
Yorkshire/The Humber £176,065 £735.60
Tim Bannister, Rightmove’s property expert, says: “It’s early days, but the acceleration in mortgage rate drops since the Bank Rate cut at the start of the month means that home-movers are starting to see some tangible affordability improvements, particularly against the peak-rate period of just over a year ago.
“A nearly £150 saving in monthly outgoings for a first-time buyer compared with last year is significant, and though there will be many hoping that they drop further soon, we’re heading in the right direction ahead of the Autumn season.”
