Buyers are also adjusting their lifestyles in response to challenges
Nearly a third (32%) of prospective homebuyers in the UK are delaying their property purchases, with the figure rising to 36% among first-time buyers, according to new research from Mortgage Advice Bureau.
The study cited increased housing prices (39%), higher interest rates (29%), and the cost-of-living crisis (28%) as the main factors affecting homebuying plans.
Higher interest rates are proving particularly challenging, with 25% of all prospective buyers and 26% of first-time buyers struggling to get mortgage approvals due to increased costs.
In response to these financial pressures, one in five (20%) prospective buyers have taken on additional jobs, a figure slightly higher among first-time buyers at 22%. Furthermore, 17% of first-time buyers have had to extend their mortgage terms, and the same proportion have borrowed more than initially planned to afford a home.
The cost-of-living crisis is also impacting credit scores, affecting 21% of prospective buyers and 25% of first-time buyers while concerns over job security or potential redundancies are influencing 12% of all buyers and 13% of first-time buyers.
In addition, rising rents are making it more difficult for 23% of buyers, and 36% of first-time buyers, to save for a deposit.
Only 9% of prospective buyers, and just 5% of first-time buyers, report that their homebuying plans have not been impacted.
Many buyers are also adjusting their lifestyles in response to these challenges, with 42% cutting back on luxuries and 33% reducing socialising.
“As we navigate the complexities of the current housing market, the impact of higher interest rates cannot be overstated,” said Ben Thompson (pictured), deputy chief executive at Mortgage Advice Bureau. “However, with innovations in the market and light starting to appear on the horizon, there is still a possibility that 2024 can be the year to get on the property ladder.
He advised that mortgage products considering rental payments could help buyers struggling to save for a deposit. He also noted that extending a mortgage term to lower repayments could be temporary, with the option to remortgage and shorten the term later.
“It’s also important that buyers don’t try and time the market, as it’s nearly impossible to time the property market at the perfect sweet spot,” Thompson said. “If you’re able to buy a property you like, go for it.
“For those not yet at the stage to sign on the dotted line or just starting out on the journey to homeownership, using a mortgage calculator can help you estimate how much you can comfortably borrow upfront, giving you a head start in your property search. It takes a lot of time to get all your ducks in a row, so starting now and getting advice to become mortgage ready is key.”
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