The average interest rate on a new five-year fixed mortgage deal has hit 6% for the first time in three years, intensifying pressure on first-time buyers already facing soaring house prices and the cost of living crisis. The government is expected to provide further details this week of its proposed Your First Home scheme, aimed at helping more people onto the property ladder.
Pre Ramteke, who moved to the UK from India in 2021, pays around £900 a month in rent before bills. She said saving enough for a deposit to buy her first home with her partner remains out of reach. She estimates it could take three to four years to save enough for a deposit on a typical three-bedroom home. "Sometimes I do think that I'm trying to chase a dream that's going further and further away," she told the BBC. Although the monthly mortgage instalments would be similar to what she currently pays in rent, she identified the deposit as the biggest barrier. "We know that if we buy a property, the instalments are going to be the exact same as the rent is right now. But the deposit is what is the biggest challenge for us," she said.
Estate agent Zunara Tariq, of Oakmere Signature Homes, said affordability remained one of the biggest issues facing buyers. Even people on high salaries were struggling to save. "Affordability is a massive thing that we've seen at the moment, and cost of living and affordability work hand in hand," she said. While welcoming government support, Tariq cautioned that no single scheme would work for everyone. She noted that prices were continuing to rise and lenders were being more cautious. "Any support available is positive support in the right direction, but it may not always be practical and it isn't always suitable for every first-time buyer," she added.
Tyne Steele, a self-employed electrician, also described renting while trying to build up a deposit as challenging. He shares costs with his partner but said unexpected bills could quickly deplete savings. "It is hard to save. If your car breaks down, it could be £1,000 gone out of that savings pot," he said. He welcomed incentives such as the Lifetime ISA but argued that tackling wider financial pressures should remain a priority.
The government's Your First Home scheme is expected to offer 2.5% deposits alongside government-backed equity loans for eligible first-time buyers purchasing new-build homes, with an earnings limit of up to £140,000. Tariq advised prospective buyers to seek professional advice and understand all their options before making such a significant purchase. "You're only a first-time buyer once, so make sure you're fully educated before you buy anything," she said.