Homeowners anxiously wait for the MPC announcement as housing market sentiment declines

The June Property Tracker report from the BSA reveals that more than half (56%) of people think the deposit required to buy a home is too high.

  • Majority think the size of deposit now required to buy a home is too high 

  • Monthly mortgage costs and raising the deposit are main barriers to buying a home

  • Fewer than one in five people think now is a good time to buy a home

Affordability concerns increase

The cost of living pressures are easing for some households due to lower inflation and strong wage growth, however for many, high house prices and mortgage rates are adding to affordability pressures on first-time buyers and those looking to re-mortgage or move home.

The June Property Tracker report from the Building Societies Association (BSA) reveals that more than half (56%) of people think the deposit required to buy a home is too high. For first-time buyers this increases to 63%. This is unsurprising considering a typical first-time buyer now needs a deposit of around £60,000, a whopping 160% higher than the average £23,000 required in 2005*. Wages have grown by less than half this amount in the same period**. 

The report shows that the affordability of monthly mortgage repayments is a growing barrier to buying a home, with 68% citing this, an increase from 62% in March. A similar number (65%) find raising a deposit is an obstacle, up from 60% in March. 

Homeowners and aspiring homeowners will be keenly waiting for the MPC announcement on the Bank Rate later today. Earlier this year many were expecting a cut to the rate this summer, but this is now looking unlikely, as some measures of inflation remain higher than expected. This could mean that mortgage affordability does not start to ease, as had been anticipated.

Mortgage arrears levels have so far remained low and the majority of people (88%) did not express that they were concerned about keeping up with their mortgage payments. However, a small minority are not confident about making their mortgage payments over the next six months. In total 10% said they were not confident, which is similar to the 8% March.

House prices

An increasing number of people think house prices will rise over in the next 12 months – 45% compared to 41% in March and just 23% in June 2023. Rising house prices, especially when they outstrip wage growth, is likely to increase the already significant burden of raising a deposit for first-time homebuyers.

Commenting on the findings, Paul Broadhead, Head of Mortgage and Housing Policy at the BSA said:

“It’s unsurprising that housing market sentiment has declined this month, as mortgage affordability continues to be a significant barrier to buying and owning a home. Borrowers will be disappointed that the Bank Rate is expected to remain unchanged today, as a cut would have provided a little much-needed optimism to homeowners and first-time buyers.

“Whilst it is pleasing to see the main political parties recognising the struggles of homebuyers, particularly first-time buyers, in their manifestos, it will take more than short-term government schemes to fix our broken housing market. 

“The new government must commit to working with lenders, regulators, the wider housing market industry, and the public to make homes more affordable, more available, and more appropriate to the needs of those living in them and the world we live in.

“In our first-time buyer report - Age-old problems, modern solutions: A roadmap for change - we identified potential long-term solutions that would support not only today’s first-time buyers, but which won’t fail future generations of homebuyers. We hope whichever party is leading government on the 5th July will commit to new and radical solutions to support the UK housing market.”

*BSA First-time buyer report – Age-old problems, modern solutions: A roadmap for change – April 2024
** ONS Average Weekly Earnings, Total Pay, series KAB9. 2005 versus 2023.

Press contacts:

Tanya Jackson, tanya.jackson@bsa.org.uk Tel: 07881 501098

Katie Wise, katie.wise@bsa.org.uk Tel: 020 7520 5904

Notes to Editors:

1.    The Building Societies Association (BSA) represents all 42 building societies, as well as 7 of the larger credit unions. Building societies serve around 26 million consumers across the UK and have total assets of over £515 billion. Together with their subsidiaries, they have helped over 3.5 million families and individuals to buy a home with mortgages totalling over £385 billion, representing 24% of total mortgage balances outstanding in the UK. They are also helping over 23 million people build their financial resilience, holding over £385 billion of retail savings, accounting for 19% of all cash savings in the UK.  Within this, societies account for 40% of all cash ISA balances.

2.    With all of their headquarters outside London, building societies employ around 51,500 full and part-time staff.  In addition to digital services they operate through approximately 1,300 branches, holding a 28% share of branches across the UK. 

3.    For the June Property Tracker survey fieldwork was undertaken between 3-4 June 2023.  Total sample size was 2,021 adults.  The survey was carried out online. The figures have been weighted and are representative of all GB adults (aged 18+). All figures, unless otherwise stated, are from YouGov Plc.

4.    When selecting barriers to property purchase respondents were asked to choose their top 3 barriers from a list of options.

5.    When calculating the proportion of those concerned about paying their mortgage or rent it excluded respondents who said ‘not applicable’ or ‘prefer not to say’

6.    The proportion agreeing ‘now is a good time to buy’ includes those who agree strongly and those who tend to agree, while the proportion disagreeing includes those who disagree strongly and those who tend to disagree. Respondents who answered 'don't know' are not shown, so percentages do not sum to one hundred.

7.    Respondents were given the option to select up to three barriers’ when asked what they think are most likely to stop someone from buying a residential property at the moment.