First-time buyers have seen their average mortgage payments drop by almost £150 since the peak of the mortgage crisis.
First-time buyers will still typically be paying a hefty £949 per month for their mortgage, according to the figures by Rightmove.
However, this is a welcome drop from £1,096 in July 2023, a saving of £147 or 13%.
The figures are based on an average first-time buyer looking at a property with two bedrooms or fewer and who has a deposit of 20% and is able to spread the cost of the mortgage across 30 years.
The cost of a typical first-time buyer home currently stands at £227,191, which is up slightly from £225,552 in July 2023.
Meanwhile, the rate on an average fixed-rate five-year mortgage for those with a 20% deposit is 4.76%, down significantly from 6.12% in July 2023.
Biggest mortgage savings
Rightmove said first-time buyers in London will see the biggest monthly cash savings compared to last year.
However, as property values tend to be higher in the capital, those buyers are likely to be paying more in cash terms than in other regions on a typical mortgage.
The average asking price of a first-time buyer property in London is £509,085 and their average monthly mortgage payment is £2,126.96.
Meanwhile, first-time buyers in the South West will see the biggest proportional drop in monthly mortgage payments compared with last year.
It is the only region where first-time buyer property asking prices are lower compared to July of last year.
The average asking price of a first-time property in the South West is £252,158, while the average monthly mortgage payment in that region is £1,053.52.
Affordability improvements
Tim Bannister, Rightmove’s property expert, said: “It’s early days, but the acceleration in mortgage rate drops since the bank rate cut at the start of the month means that homemovers are starting to see some tangible affordability improvements, particularly against the peak-rate period of just over a year ago.
“A nearly £150 saving in monthly outgoings for a first-time buyer compared with last year is significant, and though there will be many hoping that they drop further soon, we’re heading in the right direction ahead of the autumn season.”
How far will mortgage rates fall?
However, while lenders have been cutting rates, they may not go as low as previously expected.
Elliott Cully, director of Mortgage Finance, said: “There is confidence the base rate may fall further, which should install further confidence in the mortgage market and should drive rates lower.
“However, we have been in this position before with rates falling into the 3%s, only to be brought back to the new reality we face. The economy is still fragile and we are not out of the woods completely yet.
“The new normal is likely to be rates in and around the 3% mark, the days of 1-2% are in the rear-view mirror.”
