Editor's note: This brief was summarised by The Property AI Newsroom from a report by The Negotiator. Read the original article for full details.

First-Time Buyers Face Higher Mortgage and Deposit Costs

First-time buyers are experiencing increased pressure from higher mortgage rates and unaffordable deposit requirements, according to Moneyfacts. The financial data company warns that further rises in the Bank of England Bank Rate could intensify the squeeze on those looking to enter the property market.

Moneyfacts reports that low deposit buyers are now being charged more than 6% on their mortgages. The average new mortgage rate has risen to 5.59%, up from 5.47% at the start of July and 4.90% in March. Lenders such as Santander, HSBC, and Lloyds Bank have all increased both fixed and tracker mortgage rates in response to volatile swap rates.

The Bank of England recently kept the Bank Rate at 3.75%, but a third of its Monetary Policy Committee members voted for an increase. The Governor of the Bank of England has indicated that a future rate rise may be necessary to control inflation.

Moneyfacts highlights that those able to save a 10% deposit will have more purchasing power and access to a wider range of cheaper mortgage rates. However, the company also notes that some borrowers may struggle to save even a 5% deposit due to the lack of affordable housing.

For letting agents and inventory clerks, these developments may impact the flow of first-time buyers into the rental and sales markets, as affordability challenges persist.