It is more difficult for first time buyers to get a foot on the property ladder than it was during the 2009 recession, new research has revealed.
Despite average mortgage payments falling to 2003 levels, the Ability to Buy Index from the Royal Bank of Scotland shows that there is a real squeeze on first time buyers.
Average monthly mortgage payments may have fallen, but the rising cost of living is making it harder and harder for first time buyers to raise the money needed for a deposit.
The Index found that first time buyer house prices were 18% below their peak in 2007, and gross earnings have risen by 10%.
But while this should increase the ability of first time buyers to purchase a mortgage, and keep up with the payments; the rising cost of food, transport and utilities has cancelled out these declines.
ìOur first results show that higher living costs are making it more challenging for first-time buyers to enter the market, despite the lowest mortgage payments in almost a decade,î said Fionnuala Earley, Consumer Economist at RBS Group.
ìBut the news is not all bad – inflation is now beginning to fall and assuming earnings still rise and interest rates remain low, this should help to improve the ability for first time buyers to enter the market.î
In terms of saving for a deposit, the Ability to Buy Index found that it would take the average first time buyer three years to raise the 10% needed.
First time buyers in London and the South East would take the longest at just under four years, with those in the North of England, Scotland, and Yorkshire & Humberside taking the least time at around two and a half years.
If you are a first time buyer looking for a mortgage, you can compare mortgages with Money Expert.