How much are first-time buyers spending on mortgages?

First-time home buyers are spending nearly 37% of their take-home salary just to pay for mortgages, a report by the Nationwide Building Society (NBS) found.

According to the building society, this number was higher than the 30% long-term average, which cements how tough the current market is for new buyers who are looking to purchase a home. It further found that despite the growth in wages in the year to July, house price growth also increased, climbing 2.1% in the previous month. This was the fastest pace recorded since December 2022.

Nationwide’s chief economist Robert Gardner stated that with the increase in wages, many people grew confident in being able to pay for a mortgage. However, high mortgage rates and affordability issues made prospective buyers hold off on purchasing a home.

Gardner added that the monthly mortgage payment was still high in contrast to what first-time buyers were spending before the pandemic, meaning that there were fewer people who could afford to buy properties. While prices for homes were still below what was recorded in 2022, the average house price last month had risen to £266,334.

The chief economist said that part of the reason behind the increase in annual price growth was weak growth year-over-year. While pay growth was slowing down, it was still shown to outpace rising prices.

This speed of pay growth is one of the factors that the Bank of England may have considered when it chose to reduce rates from 5.25% to 5.0% on Thursday.

Economists and analysts look forward to a cut back on rates as it may improve conditions in the housing market for both buyers and sellers.

What do you think about this story? Share your thoughts in the comments below.

Want to be regularly updated with mortgage news and features? Get exclusive interviews, breaking news, and industry events in your inbox – subscribe to our FREE daily newsletter. You can also follow us on Facebook, X (formerly Twitter), and LinkedIn.