Number of first time buyers fell 11% in 2022, says Halifax, as data reveals the average buyer needs a £62,500 deposit to get onto the ladder
The number of UK first-time buyers dropped by 11 per cent in 2022, according to new data from Halifax, as the average deposit required soared to almost £62,500.
Overall, 362,461 buyers made it on to the housing ladder last year, with the year-on-year fall following a record level seen in 2021.
Average property values for first-time buyers are now around 7.6 times the average UK salary, Halifax said.
In 2022, the average cost of a home for a first-time buyer rose 13 per cent to £302,010, with average deposits now 21 per cent of purchase price.
This means on average a first-time buyer needs to raise £62,470 for a deposit in order to buy a home, 8 per cent more than in 2021.
Nearly two thirds of first time home purchases are now done in joint names
In 2021, the ‘race for space’, built up demand during the pandemic and the stamp duty holiday, led to a record number of buyers getting the keys to their first home.
The 2022 fist-time buyer figure remained above pre-pandemic levels and was the highest figure since 2016.
However, Halifax’s data did reveal that buying a home is becoming less affordable. It said that almost two thirds (63 per cent) of mortgage completions are now in joint names, with two or more people.
This may be due to deposit and mortgage affordability constraints, which remain the biggest barrier to first-time buyers owning their own property.
Data from Nationwide has shown that first-time buyer homes are the least affordable they have been since 2008, as mortgage payments eat up 39 per cent of a buyer’s salary.
However, despite these hurdles, first-time buyers now account for over half (52 per cent) of all loans on homes – the highest in the last decade.
The number of first time buyers in 2022 exceeded figures seen pre-pandemic
The most affordable area for first-time buyers in the UK is West Dunbartonshire in Scotland, with buyers needing to borrow roughly 2.7 the average salary in order to buy.
The least affordable areas in the country are in London. First-time buyers face average house prices of 10 times the average salary if they want to buy in Westminster or Camden.
Needing to save a larger deposit means that the average age of a first-time buyer is on the rise. A decade ago, the typical first-time buyer in the UK was aged 30, but that has now risen to 32.
>> On the hunt for a home? The first-time buyer’s guide to getting a mortgage and climbing onto the property ladder
For first time buyers the average deposit needed to get on to the ladder is now over £62,000
Kim Kinnaird, mortgages director at Halifax, said: ‘Over 362,000 people got on the property ladder in 2022, with first-time buyers now accounting for over half of all home loans.
‘Buyers looking to make their first step onto the property ladder may welcome the forecasted fall in house prices this year – providing the supply is there. Nonetheless, the cost of purchasing a home is still significant and saving for a deposit can be challenging for some first-time buyers.
‘The length of time needed, and cost of, raising a deposit are likely having an impact on the profile of the average first-time buyer over time. Today, those starting out on the housing ladder are 32 years old, on average – two years older than a decade ago – and almost two thirds of people are now getting their first mortgage in joint names.’
What to do if you need a mortgage
Borrowers who need to find a mortgage because their current fixed rate deal is coming to an end, or because they have agreed a house purchase, should explore their options as soon as possible.
This is Money’s best mortgage rates calculator powered by L&C can show you deals that match your mortgage and property value
What if I need to remortgage?
Borrowers should compare rates and speak to a mortgage broker and be prepared to act to secure a rate.
Anyone with a fixed rate deal ending within the next six to nine months, should look into how much it would cost them to remortgage now – and consider locking into a new deal.
Most mortgage deals allow fees to be added the loan and they are then only charged when it is taken out. By doing this, borrowers can secure a rate without paying expensive arrangement fees.
What if I am buying a home?
Those with home purchases agreed should also aim to secure rates as soon as possible, so they know exactly what their monthly payments will be.
Home buyers should beware overstretching themselves and be prepared for the possibility that house prices may fall from their current high levels, due to higher mortgage rates limiting people’s borrowing ability.
How to compare mortgage costs
The best way to compare mortgage costs and find the right deal for you is to speak to a good broker.
You can use our best mortgage rates calculator to show deals matching your home value, mortgage size, term and fixed rate needs.
Be aware that rates can change quickly, however, and so the advice is that if you need a mortgage to compare rates and then speak to a broker as soon as possible, so they can help you find the right mortgage for you.
> Check the best fixed rate mortgages you could apply for