Average first-time buyer needs to earn £41,000 to get a mortgage

Posted 13 May 2015 by Nick Parkhouse

If you're a first-time buyer, getting onto the housing ladder has become increasingly tough over recent years. Rising house prices and changes to the way that mortgages are underwritten means that it has become more difficult to get a home loan since the global financial crisis and the introduction of new mortgage rules in 2014.

Now, a new report has found that the average first-time buyer in the UK needs to earn almost twice the average wage in order to secure a mortgage.

First-time buyers have to earn significantly more than the average wage to afford a home

A new report has revealed that the average first-time buyer in the UK needs to earn a minimum income of £41,000 to get a new mortgage, almost twice the UK's average wage of £22,000.

The KPMG study shows that the divergence between average wages and house prices is now so wide that affordability is a major issue for millions of first-time buyers unless they are on a very high wage or they have access to a large deposit – perhaps from an inheritance or from family.

Unsurprisingly, it is first-time buyers in London that have the toughest time getting on the property ladder. They need to earn around £77,000 in order to buy their first home despite the average worker in the capital earning just £28,000.

The figures, which are based on a 10% deposit and borrowing the remaining 90% at 4.5 times annual income, vary widely between the North and South. However, in each region of the country, first-time buyers have to be earning more than the average wage in order to be able to afford to buy their own home.

Northern Ireland has the smallest gap with the actual average wage at £18,857 against the £21,219 needed. In England the narrowest gap is in the North East with £20,149 against £23,616.

“These figures make for frightening reading and show that housing affordability is no longer just a problem for lower wage earners,” says Jan Crosby, head of housing at KPMG. “Now unless you earn well above average or receive an inheritance, it is unlikely you will be able to afford to buy, no matter where in the UK you live.”

The research found that first-time buyers in other areas of the UK had to earn significantly more than the average wage in order to afford their own home. Buyers in the West Midlands had to earn £8,648 more than the region's average wage to get a mortgage while aspiring homeowners in Scotland had to earn £5,018 more than the average in order to be able to get onto the housing ladder.

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