The proportion of people who think mortgage affordability is a barrier to homeownership is now at its highest level in 15 years, a new report has revealed.
The latest Property Tracker report from the Building Societies Association (BSA) shows that people now think the cost of a mortgage is the biggest obstacle to buying a property when asked to choose their top three barriers. Since the first Property Tracker in 2008, raising a deposit has almost always been the biggest barrier to home buying, dropping to second place during the Covid-19 pandemic, when lack of job security was noted as the biggest obstacle. However, since the Bank of England began hiking interest rates in December 2021, the affordability of monthly mortgage payments as a barrier has grown substantially. Almost three-quarters (71%) of people now cite this when asked for their top three barriers, making it the biggest blocker to home buying. In December 2021, significantly fewer people (39%) mentioned the affordability of mortgage payments as a barrier to buying a home.
Raising a deposit continues to be a significant obstacle to buying a residential property for a major of people (60%). However less than one in five think a lack of job security (19%) and concern about house prices falling (18%) would prevent them from buying a new home. When homeowners were asked about the affordability of their monthly mortgage payments over the next six months, the majority did not express any concern about keeping up with their housing costs. Those who rent their home are a little less assured, with around three-quarters (74%) feeling confident about meeting their housing costs.
Sentiment in the housing market remains low, but stable. The proportion of people who think now is a good time to buy a property is just 17%, around the same as it was six months ago. Those who specifically think now is not a good time to buy a new home is considerably higher at 44%, rising to almost seven in 10 (68%) amongst first-time homebuyers.
Commenting on the findings, Paul Broadhead, Head of Mortgage and Housing Policy at the BSA said:
“Following 13 consecutive Bank Rate rises it’s no surprise that concerns around mortgage affordability have grown, and it is now the biggest obstacle for would-be homebuyers. It is, however, encouraging that the vast majority of homeowners still remain confident that they can maintain their mortgage payments. As inflation figures have finally started to abate, many of these people will now be hoping for the long-awaited respite from rising interest rates.
Lenders remain conscious that there are a number of families and individuals for whom meeting their mortgage payments is a real worry. They are ready and well equipped to offer practical, tailored support to anyone who may be struggling and would encourage anyone with concerns to contact them as soon as possible, preferably before they miss any payments.”
Rightmove’s latest House Price Index revealed that the average new seller asking price increased marginally by 0.4% (+£1,386) this month to £366,281, lower than is usual for this time of year. 36.3% of properties currently for sale have had a price reduction, with an average reduction equating to £22,700 nationally (6.2%). The number of sales being agreed in August across all property types dropped 18% versus August 2019. The House Price Index also revealed that the first-time buyer sector (two-bedrooms or fewer) is once again the best performing sector, with sales agreed down by 13% versus 2019. The number of new properties coming to market jumped up 12% in the first week of September when compared with the average weekly number throughout August.
Tim Bannister Rightmove’s Director of Property Science, said:
“As we enter a key selling season, more people who have been thinking about what they need from a home and where they want to be living next year and beyond are taking action and coming to market. This has helped to improve buyer choice, especially for those looking for larger homes, which also means that new sellers in the middle and upper sectors need to be extra careful not to set their price expectations too high.
Plenty of sales are being agreed for properties that are priced at the right level, and those that are selling are still taking five days less than at this time in 2019. We’re also seeing the number of fall-throughs decline as market conditions and mortgage rates stabilise.”
