Rising mortgage rates leave first time buyers locked out of homeownership

As mortgage rates continue to rise, first-time buyers are increasingly concerned about their ability to step onto the property ladder. Our findings paint a stark picture of the challenges facing prospective homeowners, with affordability, approval hurdles, and interest rate fears topping the list of barriers.

The approval process is increasingly seen as a major obstacle, with more than a quarter of first-time buyers viewing it as one of the biggest barriers to homeownership. Over a quarter (28%) of first-time buyers identify mortgage approval as one of the biggest barriers to homeownership, compared to 23% of all prospective buyers.

Many first time buyers also shared concerns about affordability, with two in five stating that current mortgage rates are making it harder for them to purchase a property. This sentiment is shared by 37% of all prospective buyers. For many, the lack of rate reductions is a pressing issue. Nearly a third of first time buyers identify stagnant interest rates as one of the main challenges to achieving their homeownership goals, a view mirrored by prospective buyers.

Monthly repayments are another source of anxiety, with nearly one in three first-time buyers worried they won’t be able to afford them. This concern is less pronounced but still significant among prospective buyers overall. Additionally, a quarter of first-time buyers are apprehensive about what their next mortgage rate might be, and many fear that rates will not drop quickly enough to ease their financial strain.

For some, these fears extend to more immediate financial risks. Almost 20% of first-time buyers worry about falling behind on their monthly payments, compared to 15% of prospective buyers overall. With just one in ten first-time buyers saying they feel unconcerned about mortgage rates, it is clear that the uncertainty surrounding interest rates looms large for most.

As a result of these challenges, over a third of first-time buyers have had to delay their plans to purchase a home. This figure is slightly lower but still concerning for all prospective buyers, among whom nearly a third report similar delays.

The findings underline the pressing need for government intervention to support first-time buyers and prospective homeowners. Without targeted action, the growing barriers to homeownership risk sidelining a generation of aspiring buyers.

If you're a first time buyer looking to kickstart your homebuying journey, our friendly team of expert advisers are on hand to help.