The housing market in the UK is presenting significant challenges for first-time buyers, according to a recent report by the Building Societies Association (BSA). The study indicates that prospective buyers are facing the highest hurdles in seven decades due to the combination of exceptionally high down payments and steep mortgage repayments.
The report highlights that the typical first-time buyer needs to provide a substantial down payment, averaging around £60,000 ($74,000), with even higher amounts required in London, reaching up to £144,000 ($178,000), where support from family is almost deemed essential.
Moreover, mortgage rates have surged, nearing levels last observed before the global financial crisis, further exacerbating the financial burden on buyers. The Bank of England's decision to raise official interest rates, along with other factors such as fiscal policy changes, has contributed to this increase in mortgage costs.
As a result, the average mortgage repayment has risen significantly, with first-time buyers now dedicating a larger portion of their monthly income towards mortgage repayments compared to previous years. This sharp increase in housing costs has become a major barrier to home ownership, making it increasingly difficult for individuals, especially those without financial assistance from family, to enter the housing market.
The situation has led to many individuals being stuck in private rented accommodation, where rents are also on the rise, further exacerbating the affordability crisis in the housing market.
The report suggests that addressing these challenges requires acknowledgment and action from policymakers, particularly in terms of providing support to prospective first-time buyers and addressing broader housing affordability issues.
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