Falling Mortgage Rates Offer Relief to First-Time Buyers

The average mortgage payment for first-time buyers has dropped by nearly £150 compared to the peak seen in July 2023, according to a new analysis from Rightmove.

Currently, the average monthly mortgage payment for a first-time buyer is £949, down from £1,096 in July 2023. This amounts to a saving of £147, or 13%.

These figures are based on typical first-time buyer homes—those with two bedrooms or fewer—assuming the buyer has saved a 20% deposit and is spreading mortgage payments over 30 years.

The average price for a first-time buyer home now stands at £227,191, up slightly from £225,552 in July 2023. Meanwhile, the average five-year fixed mortgage rate for an 80% loan-to-value (LTV) mortgage has fallen to 4.76%, compared to 6.12% in July 2023.

Buyers in London will experience the largest cash savings compared to last year, though higher property prices mean they are still likely to pay more than those in other regions. First-time buyers in the South West will see the biggest percentage reduction in monthly payments, as it is the only region where property asking prices are lower than they were in July 2023.

Additionally, average wages have risen by 4% since July 2023, indicating a gradual improvement in affordability. The UK inflation rate has also dropped to 2.2%, down from 6.8% in July 2023.