The number of first-time buyers fell 11% in 2022, Halifax says, as data reveals the average buyer needs a deposit of £62,500 to get on the ladder
The number of first-time buyers in the UK dropped by 11 per cent in 2022, according to new data from Halifax, as the average deposit required soared to almost £62,500.
Overall, 362,461 buyers made it onto the housing ladder last year, with the year-on-year decline continuing to a record level seen in 2021.
Average property values for first-time buyers are now around 7.6 times the UK average wage, Halifax said.
In 2022, the average cost of a home for a first-time buyer increased by 13% to £302,010, and average deposits now represent 21% of the purchase price.
This means that, on average, a first-time buyer needs to raise £62,470 for a deposit to buy a house, up 8 per cent from 2021.
Nearly two-thirds of first-time home purchases are now in a joint name
In 2021, the ‘race for space’, the demand built up during the pandemic and the stamp duty holiday, led to a record number of buyers getting the keys to their first home.
The number of first-time buyers in 2022 remained above pre-pandemic levels and was the highest number since 2016.
However, the Halifax data revealed that buying a home is becoming less affordable. He said nearly two-thirds (63 percent) of completed mortgages are now in a joint name, with two or more people.
This may be due to deposit and mortgage affordability restrictions, which remain the biggest barrier for first-time buyers who own their own property.
Nationwide data has shown that first-time buyer homes are the least affordable since 2008, with mortgage payments eating up 39 percent of a buyer’s salary.
Yet despite these hurdles, first-time homebuyers now account for more than half (52 percent) of all home loans, the highest in the past decade.
The number of first-time buyers in 2022 surpassed the numbers seen before the pandemic
The most affordable area for first-time buyers in the UK is West Dunbartonshire in Scotland, where buyers need to borrow about 2.7 of the average wage to buy.
The least affordable areas of the country are in London. First-time homebuyers face median home prices of 10 times the median salary if they want to buy in Westminster or Camden.
The need to save a larger deposit means that the average age of a first-time homebuyer is increasing. A decade ago the typical first-time buyer in the UK was 30, but this has now risen to 32.
>> Looking for a home? The first-time buyer’s guide to getting a mortgage and moving up the property ladder
For first time buyers, the average deposit needed to get on the ladder is now over £62,000
Kim Kinnaird, Halifax’s chief mortgage officer, said: “More than 362,000 people jumped on the property ladder in 2022, and first-time homebuyers now account for more than half of all home loans.”
‘Buyers looking to take their first step up the property ladder can welcome the expected drop in house prices this year, provided there is supply. However, the cost of buying a home is still significant, and saving for a down payment can be a challenge for some first-time buyers.
‘The amount of time needed and the cost of collecting a deposit are likely to have an impact on the profile of the average first-time buyer over time. Today, those starting on the housing ladder are 32 years old, on average, two years older than a decade ago, and nearly two-thirds of people now get their first mortgage in a joint name.’
What to do if you need a mortgage
Borrowers who need to find a mortgage because their current fixed rate agreement is coming to an end, or because they have agreed to purchase a home, should explore their options as soon as possible.
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What if I need to re-mortgage?
Borrowers should shop around and talk to a mortgage broker and be prepared to act to secure a rate.
Anyone with a fixed-rate agreement ending within the next six to nine months should consider how much it would cost to remortgage now and consider closing a new agreement.
Most mortgage deals allow fees to be added to the loan and are then only charged when you withdraw. By doing this, borrowers can lock in a rate without paying expensive setup fees.
What if I am buying a house?
Those with agreed home purchases should also aim to lock in rates as soon as possible, so they know exactly what their monthly payments will be.
Homebuyers should be careful not to overstretch themselves and be prepared for the possibility of house prices falling from their current high levels, due to higher mortgage rates limiting people’s borrowing capacity.
How to Compare Mortgage Costs
The best way to compare mortgage costs and find the deal that’s right for you is to talk to a good broker.
You can use our best mortgage rate calculator to display offers that match your home value, mortgage size, term, and fixed rate needs.
Keep in mind, however, that rates can change quickly, so the advice is if you need a mortgage, compare rates and then speak to a broker as soon as possible, so they can help you find the right mortgage for you. .
> Consult the best fixed-rate mortgages that you could apply for