People aiming to buy their first house have been largely undeterred by the economic shocks of the last few months and are making lifestyle changes to compensate, shows a study from Rightmove.
Its research says that demand from would-be first-time buyers (FTBs), while down 26% compared to last year, “Is still three-quarters of last year’s level in what was an exceptional market,” and is 4% higher than in 2019.
In their efforts to buy a house, 72% of people asked by Rightmove said they had reduced spending on going out or eating out and 55% have cut their energy use.
Additionally, 49% said they are spending less on holidays and 48% said they are spending less on food and essentials.
What may be more concerning is that 15% said they are using credit more than usual.
Another statistic of note is that just 16% of people asked said that all of part of their deposit would be from a loan or gift from friends or family.
The study also says that the average time it takes a hopeful FTB to save for a deposit is currently five years and the average monthly payment for a 90% LTV two-year fix is £1,324 – 41% more than the average monthly rental bill.
Rightmove property expert Tim Bannister says: “The sudden nature of mortgage interest rate increases has meant that FTBs have had to very quickly reassess their position. For example, those who already had a mortgage offer in place are trying to rush through their purchase to keep their lower rate. Many of those who had not yet secured an offer and found that the monthly repayments they would pay on a mortgage were a lot more expensive than planned, either had to budget for the extra costs, look for a cheaper property and borrow less, or pause their plans altogether.
“Now that mortgage rates have started to settle down, FTBs will be hoping that there are no surprises in today’s Autumn budget, and they can begin to get some longer-term assurance and financial certainty after what has been a turbulent and very uncertain two months.
“Despite the many significant challenges facing first-time buyers at the moment, the fact that demand in the sector is still above the last normal market of 2019 shows that there are many motivated first-time buyers right now who are still determined to get onto the ladder.
“For those without their deposit saved yet, the results of our FTB study indicate that buying a first home remains very important to people. They are not being put off saving due to the current economic climate, and instead are making decisions in order to save as much as they can towards a deposit.”
