First-time buyer monthly mortgage now 15% cheaper than renting

A significant shift in housing affordability has emerged as rising rental prices have made homeownership, on average, 15% cheaper than renting, reversing a prior trend.

The average monthly rent in England and Wales currently stands at £1,250, whereas the typical mortgage repayment for first-time buyers is £1,066. This comparison is based on a first-time buyer purchasing a £240,000 home with a 20% deposit, a 25-year mortgage term, and a 5-year fixed interest rate of 4.4%.

The decline in mortgage rates has further supported this shift, with monthly mortgage payments for the average first-time buyer home having peaked in mid-2023 before decreasing by 10%.

However, despite the relative affordability of mortgage payments compared to rent, the challenge of saving for a deposit remains a significant barrier, as a 20% deposit for an average-priced first-time buyer home amounts to £48,000.

This data underscores a changing financial landscape where purchasing a home may now be a more economical option than renting, provided buyers can overcome the upfront financial hurdles.

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Uptick in mortgage approvals

News / Cyril Osei-Gyamfi

Mortgage approvals in January 2025 increased by 18% compared to January 2024, with 66,200 approvals recorded.

This surge is largely attributed to buyers rushing to secure properties before the stamp duty nil-rate threshold reverts from £250,000 to £125,000 in April.

While this urgency may lead to a quieter market post-April, broader indicators suggest a modest rise in demand and transactional activity, even for sales unlikely to be completed before the deadline.

The latest RICS UK Residential Market Survey highlights an increase in market appraisals compared to the previous year, reinforcing expectations of a steady, albeit cautious, rise in transactions.

However, while the removal of stamp duty incentives introduces additional costs, economic uncertainties related to inflation and mortgage rate fluctuations may temper buyer enthusiasm as the year progresses.

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Sales blossom in spring

News / Cyril Osei-Gyamfi

Spring brings a sense of renewal, not only in nature but also in the property market, where activity surges as flowers bloom and daylight extends. Data indicates that two-thirds of homes listed for sale in February and March successfully complete transactions, marking the highest success rate compared to any other months.

February and January also have the fastest average time to find a buyer at 51 days, with March and April following closely at 52 days.

This seasonal trend underscores the significance of spring as an optimal period for home sales, likely driven by increased buyer interest and favorable market conditions.

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First-time buyers make a comeback

News / Cyril Osei-Gyamfi

The number of first-time buyers entering the property market increased by 19% in 2024 compared to 2023, reaching 341,068. Although this remains below the 2022 peak of 369,870, it marks a significant recovery following the decline in 2023. This resurgence is likely linked to improved mortgage affordability, as interest rates have stabilised, offering greater financial certainty to prospective buyers.

First-time buyers accounted for 54% of all mortgaged home purchases, demonstrating their substantial presence in the market. Additionally, 62% of these transactions involved joint purchases, indicating a trend toward shared homeownership. The average age of a first-time buyer is 33, reflecting the demographic profile of those stepping onto the property ladder. These trends suggest a revival in first-time home ownership, driven by more favourable financial conditions.

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Renters are putting down roots

News / Cyril Osei-Gyamfi

Renter behaviors are shifting significantly, with renting no longer seen solely as a temporary phase before homeownership but increasingly becoming a long-term lifestyle choice. As tenants establish deeper connections with their rental properties, landlords are adapting to meet these evolving expectations. A substantial 73% of landlords are open to renters personalizing their homes, reflecting a growing flexibility in property management. Additionally, 34% of landlords collaborate with renters to approve decoration plans, further enabling tenants to create spaces that feel truly their own. Moreover, 20% of landlords involve renters in selecting tradespeople, granting tenants a greater sense of agency over maintenance and improvements. These trends indicate a progressive transformation in the rental market, where both landlords and renters are fostering more cooperative and accommodating relationships, ultimately redefining the traditional dynamics of renting.

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Good news on mortgage rates

News / Cyril Osei-Gyamfi

The mortgage market has seen a positive development as increased competition among lenders has led to interest rates dipping below 4% for certain mortgage deals with a 60% loan-to-value (LTV) ratio. The chart illustrates the trend in fixed mortgage rates over the past year, comparing 5-year and 2-year fixed rates. While rates have fluctuated, the latest data from February 2025 indicates that some mortgage providers have introduced rates under the 4% threshold, as highlighted by the yellow reference line. Both 5-year and 2-year fixed mortgage rates demonstrate a downward trend, suggesting a growing competitive pricing environment aimed at attracting borrowers. The data, sourced from Dataloft by PriceHubble and the Bank of England, reflects a broader shift in lending conditions, potentially offering favourable borrowing opportunities for homebuyers seeking lower mortgage costs.

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When homes have a hold on us

News / Cyril Osei-Gyamfi

The process of buying a home is often compared to falling in love, as both experiences involve emotional highs and lows. According to data from the English Housing Survey 2023–2024, homeowners’ length of stay in one place varies significantly based on their mortgage status. Mortgage-free owner-occupiers remain in their homes for an average of 23.8 years, demonstrating long-term stability and attachment to their property. In contrast, owner-occupiers with a mortgage tend to stay for a significantly shorter period, averaging 9.3 years. This difference suggests that financial obligations and loan terms may influence mobility, whereas outright ownership provides greater permanence. The findings highlight the varying degrees of commitment homeowners have to their properties based on financial circumstances.

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Truuli expects the market to “Spring” into action

News / Leigh Thomas

As March arrives, longer days and brighter skies draw more home buyers out to hunt for their dream property. Spring sees a surge in home sales, with 27.1% of transactions occurring during this season – the busiest of the year.

Selling benefits in spring:

Enhanced aesthetics: Natural light showcases properties beautifully.
Garden appeal: Highlighting blooming green spaces is crucial.
Increased demand: More buyers mean quicker sales and potential offers above the asking price.

Preparing your home for a spring sale:

Boost curb appeal by attending to exterior details like clean windows and gutters.
Conduct a thorough spring cleaning to present a well-maintained home.
Address any minor repairs that could catch a buyer’s eye.

Ready to sell or buy? Contact us at 0330 043 0002

Leigh Thomas – Truuli Property Expert

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Rising Trend: Over 50s Stepping into Homeownership as First Time Buyers

News / Cyril Osei-Gyamfi

The number of first-time buyers (FTBs) above the age of 50 has surged by over 30% in the last five years, while the proportion of those aged 30 and under is on the decline. With affordability becoming a challenge, more people are waiting until they are over 50 to purchase their first home.

Interestingly, although London currently has the lowest percentage of first-time buyers above the age of 50, it is experiencing the fastest growth rate. The total purchases from over-50s have increased by an impressive 64% between 2018 and 2022.

Looking ahead, it’s projected that over-40s will make up a quarter of all first-time buyer transactions by 2030, while those in their fifties will account for 5%. These findings come from #Dataloft, Tembo, FCA data spanning from 2018 to 2022.

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Seller asking prices rise by 1.3% in Jan 2024

News / Cyril Osei-Gyamfi

The average asking price for new sellers had a significant increase of 1.3% in January, marking the highest price rise since 2020. This growth is more than double the average increase seen over the past 20 years (+0.6%).

With mortgage rates decreasing and a positive economic outlook, buyer demand is on the rise. In fact, 42% of agents have reported higher buyer demand compared to the previous year.

Furthermore, the number of properties entering the market in the first week of this year has increased by 15% compared to last year. This indicates that sellers are growing more confident about the upcoming year.

To ensure a successful move this year, it is crucial to have accurate and realistic pricing that aligns with the local market.

Source: #Dataloft Poll of Subscribers, Rightmove (January 2024)

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News

First-time buyer monthly mortgage now 15% cheaper than renting

Uptick in mortgage approvals

Sales blossom in spring

First-time buyers make a comeback

Renters are putting down roots

Good news on mortgage rates

When homes have a hold on us

Truuli expects the market to “Spring” into action

Rising Trend: Over 50s Stepping into Homeownership as First Time Buyers

Seller asking prices rise by 1.3% in Jan 2024

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