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Singletons are being punished by rising rates leading to 63 per cent of first-time mortgages now being taken out in joint names.

Higher mortgage rates and squeezed budgets mean just 37 per cent of first-time buyers taking out a mortgage are purchasing solo, according to data from the country’s biggest lender, Halifax.

This is a huge change compared to 2014, the earliest year when the data was available, when just 43 per cent of first-time borrowers took out a mortgage jointly while 57 per cent bought on their own.

The increase in costs experienced in the past year has meant that banks are willing to lend less as people’s rising energy and food bills reduce how much they can afford to pay for their home loans each month. Similarly, the higher mortgage rates have also meant people can’t always borrow the same amounts they did when rates were low and pass banks’ affordability tests, particularly if this is based on one salary.

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Although property prices are expected to go down this year, by as much as 10 per cent, they have risen significantly in previous years.

The overall number of first-time buyers is still higher than pre-pandemic levels but down 11 per cent on 2021’s record high of 405,320, sitting at 362,461 in 2022.

Prices were unusually high in 2021 thanks to the “race for space” – pent up demand from the pandemic and Government measures to ease stamp duty costs, leading to a record number of first-time buyers getting the keys to their first home.

This is now easing somewhat, but affordability is still a problem with average property values for first-time buyers now around 7.6 times the average UK salary.

Separate data from the Office of National Statistics last year showed house prices grew faster than earnings in 91 per cent of local authority districts, leading to a reduction in housing affordability in these areas.

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Kim Kinnaird, mortgages director at Halifax, said: “Today, getting your own place for the first time will likely mean paying over £300,000 for that new home, and putting down, on average, a £62,000 deposit.

“The length of time needed and cost of raising a deposit are likely having an impact on the profile of the average first-time buyer over time. Today, those starting out on the housing ladder are 32 years old on average – two years older than a decade ago – and almost two thirds of people are now getting their first mortgage in joint names.”

The average two-year fixed-rate mortgage interest rate is 5.49 per cent, compared with 2.38 per cent last January, according to Moneyfacts, while a five-year deal is at 5.26 per cent, compared with 2.66 per cent 12 months earlier.

By Grace Gausden

Source: i News

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