Rising costs and affordability concerns continue to deter first-time buyers
Despite a decline in mortgage rates, a significant number of first-time buyers in the UK still view borrowing costs as a major hurdle, according to new research from Mortgage Advice Bureau (MAB).
The report found that 29% of first-time buyers cited mortgage rates as one of the biggest barriers to homeownership. Analysts attribute this to expectations that interest rates will remain higher for longer, prompting lenders to reprice mortgages upwards.
Affordability concerns remain a key issue for many, with nearly a quarter (24%) of first-time buyers worried that mortgage rates would not fall quickly enough in the coming years to make homeownership more affordable. Additionally, 31% expressed concerns about their ability to keep up with repayments and the overall affordability of loans.
The average rate for a five-year fixed mortgage currently stands at 5.09%, a modest improvement from 5.18% in March. However, some lenders have recently raised rates again, citing higher borrowing costs.
Danny Belton (pictured), head of lending at Mortgage Advice Bureau, acknowledged the difficulties facing first-time buyers but highlighted opportunities in the current market.
“Rates have risen since the summer as shifts in the global economic environment have driven up borrowing costs for lenders,” Belton said. “It is understandable that higher mortgage rates cause concern for first-time buyers, but they shouldn’t abandon their homebuying plans. Deals are still available, and innovations like rental recognition products and a growing market for higher loan-to-value mortgages are helping first-time buyers get onto the property ladder.”
Belton advised buyers planning to purchase next year to begin preparing early.
“Locking in a rate now doesn’t mean missing out — if a better deal emerges when you make an offer, you can switch,” he said. “Starting early and seeking advice can help buyers position themselves for success. Free tools such as mortgage calculators can also provide valuable insights into what’s achievable.”
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