Nationwide warns customers over 'indefinite crisis' that is 'worst for 70 years'

Now is the "worst time" to be a first-time buyer in 70 years, it has been warned. The Building Societies Association has warned more and more first-time buyers will be relying on their parents - as Nationwide warned customers they were unlikely to buy "until their forties".

It said: "Becoming a first-time buyer is expensive, possibly the most expensive it has been over last 70 years. The cost of buying is a massive barrier to many prospective first-time buyers. For example, the typical successful first-time buyer now needs a deposit of around £60,000 across the UK but the average ranges from £27,000 in the North East of England to £144,000 in London – where support from family appears almost essential.

"The sizable deposit barrier has led to the rise of the so-called Bank of Mum and Dad, while successful first-time buyers increasingly need to have two incomes that are higher than the average. Meanwhile, those without family help or on single and lower incomes have been excluded from home ownership.

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"Our analysis of UK Finance data suggests the average mortgage rate for first-time buyers rose from 2.2 per cent in March 2022 to 5.6 per cent in November 2023. The typical first-time buyer was paying 16.8 per cent of their gross income on mortgage repayments in March 2022 but by November 2023 the figure had hit 22.5 per cent."

Rachael Sinclair, Nationwide’s Director of Mortgages and Financial Wellbeing, said: "Getting onto the property ladder remains as tough as ever, with our latest research showing that one in five prospective homeowners don’t think they’ll be able to buy until their forties. Collaboration is key if we are to resolve the first-time buyer conundrum and is why we are pleased to have worked with the Building Societies Association on this report, which calls for an independent review of the first-time buyer market. Without a collaborative approach, we risk the wheels spinning on the homeownership crisis indefinitely.”

Head of mortgage and housing policy at the BSA, Paul Broadhead, said: "A properly functioning housing market is dependent on first-time buyers being able to afford their first home … new thinking and radical changes are needed."