First-timers made up biggest proportion of property buyers in 2022

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First-time buyers made up the largest proportion of property purchasers last year, despite rising borrowing costs and the cost of living crisis hitting their finances hard.

Buyers stepping onto the property ladder for the first time accounted for 53pc of mortgaged purchases, according to figures from Yorkshire Building Society. This was up from 50pc in 2021 and 41pc a decade ago. Previous data showed that the share of first-time buyers purchasing with a mortgage last reached 53pc in 1995.

But overall numbers of first-time buyers fell by 9pc as the cost of borrowing soared and low-deposit mortgages disappeared from the market.

Yorkshire Building Society estimated that first-time buyer numbers fell to 370,287 last year, compared to 405,320 in 2021. These levels were particularly high as a result of the temporary cut to stamp duty.

Demand from new buyers was up roughly 5pc from 2019 levels, prior to the pandemic. The last time first-time buyer figures peaked above 400,000 was in 2006.

The figures were compiled from UK Finance data and the mutual’s own estimates.

The continued interest from new buyers comes despite purchasers facing steeper borrowing costs and unaffordable prices. Fixed mortgage costs hit 14-year-highs in October, after the mini-Budget forced borrowing costs to soar, but began to stabilise towards Christmas.

Data from the Resolution Foundation published in November showed that the lifetime cost of taking out a mortgage is now higher than at any point since 1974. The typical cost of a first-time home rose by 10pc last year, or £25,621, to £272,500.

The threat of falling house prices in 2023 also means that borrowers who took out a mortgage with a low deposit to buy a property last year could find themselves falling into negative equity, meaning they have borrowed more than their house is worth.

Nitesh Patel, an economist at Yorkshire Building Society, said 2022 had started strongly for new mortgage deals, before tailing off as economic uncertainty caused consumers to tighten their belts.

He said: “Demand from first-time buyers remains strong, even with house prices being at historic highs for much of the year and the country experiencing such political and economic uncertainty.”

He added economic uncertainty and rising borrowing costs could “prevent would-be borrowers from making such a significant purchase or cause lenders to tighten affordability”, leading to further falls in first-time buyer numbers in 2023.

Figures from Aviva, published in November, estimated that one million people under the age of 45 had ruled out buying a property amid the pressures of the cost of living crisis.