Key findings
● 32% of prospective buyers and 36% of first time buyers are delaying purchases due to high costs and interest rates
● Financial strains lead 20% to take on extra jobs and 17% to extend their mortgage terms or borrow more
● Rent increases and living costs also force many to cut back on luxuries (42%) and socialising (33%).
The research has found that increased housing prices (39%), higher interest rates making monthly repayments unaffordable (29%), and the cost-of-living crisis (28%) are among the key factors impacting homebuying plans.
The challenge of higher interest rates is significant, with one in four (25%) prospective buyers and 26% of first time buyers finding it harder to get their mortgage approved due to increased costs.
To help manage these financial pressures, Mortgage Advice Bureau’s research found that a fifth (20%) of prospective buyers have taken on more than one job to cope with the financial strain, with this figure slightly higher for first time buyers (22%).
Additionally, one in six first time buyers (17%) have had to arrange longer mortgage terms than initially planned. The same number (17%) have also found it necessary to borrow more to afford their homes.
Other contributing factors include the cost-of-living crisis impacting credit scores (affecting 21% of prospective buyers and 25% of first time buyers), and concerns over job security or potential redundancies (affecting 12% of prospective buyers and 13% of first time buyers).
Rent increases are also exacerbating the situation, making it more difficult for 23% of buyers overall, and a significant 36% of first time buyers, to save for a deposit. Only a small fraction of prospective buyers (9%) and even fewer first time buyers (5%) report that nothing has impacted their homebuying plans.
Many prospective buyers have responded to these difficulties by adjusting their lifestyles: 42% are cutting back on luxuries and socialising (33%). As the economic and political landscape continues to evolve, potential homebuyers are being forced to adapt and reconsider their plans, delaying their dreams of homeownership amidst a shifting financial reality. However, delaying a move isn’t always necessary, and there are a few ways in which buyers can still find themselves in their dream home.
Ben Thompson, Deputy CEO at Mortgage Advice Bureau, commented: “As we navigate the complexities of the current housing market, the impact of higher interest rates cannot be overstated. However, with innovations in the market and light starting to appear on the horizon, there is still a possibility that 2024 can be the year to get on the property ladder.
“Though it isn’t suitable for all applicants, mortgage products that take rent into account can be very helpful for buyers struggling with the cost-of-living and the ability to save for a deposit. Likewise, extending a mortgage term to lower your repayments doesn’t need to stay that way. In a few years’ time, you can always remortgage, and shorten your mortgage term.
“It’s also important that buyers don’t try and time the market, as it’s nearly impossible to time the property market at the perfect sweet spot. If you’re able to buy a property you like, go for it. For those not yet at the stage to sign on the dotted line or just starting out on the journey to homeownership, using a mortgage calculator can help you estimate how much you can comfortably borrow upfront, giving you a head start in your property search. It takes a lot of time to get all your ducks in a row, so starting now and getting advice to become mortgage ready is key.”
What prospective buyers have had to cut back on:
1. I've had to cut back on luxuries - 42%
2. I've had to cut back on socialising - 33%
3. I've had to delay buying the property - 32%
4. I've had to cut back on subscriptions - 25%
5. I've had to take on more than one job - 20%
6. I've had to arrange a longer mortgage term than planned - 18%
7. I've had to borrow more - 17%
8. I have had to move to a cheaper rental property to save - 14%
9. I have asked for a pay rise - 14%
10. I've had to move back in with my parents - 14%
11. I have asked for a loan from my parents or grandparents - 12%
12. I have paused my pension contributions - 11%
13. I've had to move in with a friend - 7%
14. I've had to move back in with my grandparents - 6%
15. I haven't had to make any changes - 4%
Research methodology
The research was conducted by Censuswide with 1,003 prospective home buyers (18+) (looking to buy in the next 24 months) between 04.06.2024 - 10.06.2024. Censuswide abide by and employ members of the Market Research Society which is based on the ESOMAR principles and are members of The British Polling Council.