If you’re a first-time buyer (FTB) considering purchasing your first home in 2024, the outlook is positive. With mortgage rates falling and opportunities to secure better deals, now could be the ideal time to take that step onto the property ladder. Let's explore the key trends and figures that might make 2024 a promising year for first-time buyers.

Key Highlights

• Mortgage rates have dropped from 5.7% to 4.5% over the past year.
• Average deposits have decreased by £4,000, providing more accessible entry points for buyers.
• Monthly repayments are down by £97, saving first-time buyers nearly £1,160 annually.
• A third of all homes sold in the UK annually are bought by first-time buyers, showing strong demand.

Mortgage Rates and Affordability

In 2023, the property market faced challenges, with rising mortgage rates making home ownership difficult for many. However, mortgage rates have since eased. The average mortgage rate has dropped from 5.7% to 4.5%, meaning that buyers now require £4,000 less for a deposit compared to last year.

This reduction in mortgage rates has led to a decrease in monthly mortgage repayments. For an average-priced home, the monthly payment is now £979, down from £1,076 in July 2023. This results in a monthly saving of £97 and a total annual saving of £1,160 for first-time buyers. These savings make purchasing a home more achievable for many, especially as lower deposits are required.

Spending More on Your First Home

Interestingly, many first-time buyers are now willing to spend more on their homes. The average price of a first-time buyer property has risen by 1.4% year-on-year, with buyers now looking at properties worth around £249,100, up from £245,700 last year.

This increase reflects growing confidence in the housing market as mortgage rates become more favorable. Buyers are no longer just looking for smaller homes to get on the ladder. Many are eyeing larger properties, especially in regions like the North West and the East of England, where prices have seen increases of 4.4% and 4.3%, respectively.

What Can You Afford?

As deposits have fallen, so has the average mortgage size, now standing at £193,900. However, with many first-time buyers aiming for larger homes, they are borrowing more and will need a slightly higher income to qualify for a mortgage. The average income required to buy a first home has increased to £57,500, up from £55,800 last year.

Popular Property Types

First-time buyers across the UK have different preferences when it comes to the types of homes they’re looking for. Three-bedroom houses remain the most popular choice, especially outside London, where half of all first-time buyers opt for this property type. These homes are not only affordable but also provide the space and flexibility many buyers seek.

In London and Scotland, however, two-bedroom flats are the preferred option, mainly due to the higher prices and availability of flats in these areas. With affordability still a concern in London, many first-time buyers choose smaller properties to make the numbers work.

Regional Property Trends

The property market varies greatly across the UK. While some areas have seen price decreases, like the South West (down 2.6%) and the North East (down 1.2%), other regions are experiencing growth. In London, property prices for first-time buyers have risen by 2.5%, with homes now averaging £411,900.

Regions like the North West and East of England are seeing the highest price increases, with properties in these areas up by 4.4% and 4.3%, respectively. This indicates growing confidence in these regions, as first-time buyers are willing to spend more on larger homes.

What’s the Outlook for 2024?

2024 is shaping up to be a promising year for first-time buyers. With mortgage rates stabilizing around 4.5%, buying a first home is becoming more affordable. The market is seeing increased demand from first-time buyers, with many ready to spend more on larger homes, particularly in the North West and East of England.

While some regions still face affordability challenges, many buyers are exploring options further afield or considering smaller properties to suit their budgets. With lower rates and falling deposits, 2024 offers great opportunities for first-time buyers to make their move.

Ready to Take the First Step?

If you’re planning to buy your first home in 2024, now might be the perfect time. Use our affordability and repayment calculators to see how much you can borrow and what your monthly payments might look like. With falling mortgage rates and growing confidence in the market, you could find that your dream home is more within reach than you think.

Adapted from Zoopla