Mortgages are £200 a month higher than last year for first-time buyers, but are showing signs of settling across the market, according to property website Rightmove.
First-time buyers now pay £1,056 a month, compared to £865 last year, a rise of 22%, based on record-high asking prices of £224,963 and an average 25-year 85% loan-to-value mortgage.
Interest rates have largely driven the rise, Rightmove noted, with a spike also coming after ex-chancellor Kwasi Kwarteng delivered his September mini-budget.
Despite being higher year-on-year, first-time buyer mortgages have subsided from an October high of £1,218 a month, when many lenders pulled from the market in response to Kwarteng’s unfunded tax-cutting plan.
Rightmove mortgage head Matt Smith commented: “The combination of a new record price and higher mortgage rates than last year means it is a challenge for first-time buyers.”
However, the FTSE 100-listed real estate firm did note that mortgage rates were beginning to settle after the highs of late last year.
An average five-year, fixed-rate, 15% deposit mortgage is now 4.44%, compared to 5.89% in October - though this is still up from 2.76% this time last year.
Despite this, demand for first-time homes is currently 11% higher than 2019 levels, before the pandemic struck, Rightmove found.
“Our data indicates that first-time buyers who are able to raise their deposit are still finding buying compelling,” Smith added.
Across the market, the average mortgage has receded 14.5% since October, from £2,012 to £1,720 per month.