“There are some encouraging signs for people looking to buy a home,” said Andrew Asaam, mortgages director at Lloyds. “Wages have continued to rise while house prices have remained relatively stable, helping to narrow the gap between earnings and house prices.”
For first-time buyers, the picture has moved in a similar direction. The price-to-income ratio for a typical first-time buyer property fell from 6.1 to 5.9, also the lowest since 2015. That market segment’s average property value edged up just 0.3% to £239,681.
Despite the improvement, the deposit barrier remains formidable. The deposit alone demands the equivalent of roughly £24,000 at a 10% level. Average monthly mortgage repayments have also risen, up from £1,100 to £1,150 over the past year.
Asaam acknowledged the difficulty: “Affordability remains stretched for many households. Mortgage rates are higher than they were a year ago and saving for a deposit continues to be one of the biggest barriers facing first-time buyers.”
Average rents across Great Britain have moved up 3.2% to reach £1,382 per month, against a first-time buyer monthly repayment of £1,150. Mortgage costs now account for around 34% of income for an average first-time buyer, compared with 41% for equivalent renters. For clients who can clear the deposit hurdle, the monthly cost case for buying over renting is strengthening.
