First-time buyers (FTBs) are faced with quadrupling their deposits on a typical home to £81,510 to secure a property as rates remain high, according to The Telegraph.

New buyers must now find a 43% cash deposit if they want to keep their repayments at the same level as when average mortgage rates were 2%, says the estate agent in a report in The Telegraph. 

When mortgage rates were at 2% just over two years ago, the story says, an FTB buying a typical £247,000 home with a 10% deposit paid £941 per month on a 25-year mortgage. 

However, a two-year fix is currently 6.48%, according to Moneyfacts, which would mean an FTB would need to have a 43% deposit in order to keep monthly payments at £941. 

The story goes on to say that, even if rates fall back to 6%, FTBs would need a 41% deposit, an extra £74,100, to keep repayments at 2020 levels on a typical home. 

In July 2020, the average rate on a two-year fix was 1.99%. Since the start of October 2021 alone, the average rate on a two-year fixed-rate mortgage has surged from 2.25% to 6.48% last week.  

FTBs who cannot find larger deposits, face far higher mortgage bills, with monthly payments of £1,500 on a £247,000 home with a 10% deposit and mortgage rates at 6.5%. A jump of nearly 60% from when rates were at 2%. 

But borrowers with such high repayments would face strict affordability stress tests. 

Brokers say the effect of such higher rates on FTBs has caused demand to plunge by almost half, as well as a greater reliance on family members to help with deposits, the paper reports.