UK First-Time Buyers Face 41% Rise in Mortgage Costs

First-time buyers in the United Kingdom are facing a 41% increase in monthly mortgage repayments compared to a decade ago. Research from estate agency Yopa shows that while inflation-adjusted property prices have remained stable, average mortgage rates climbed from 1.72% in 2016 to 5.13%, raising average monthly payments from £860 to £1,213. In response, Chancellor John Healey introduced a first-time buyer scheme specifically for new-build properties.

Despite these affordability barriers, the broader mortgage market remains stable. UK Finance reported that homeowner mortgages in arrears of 2.5% or more fell 10% annually to 76,080 in the third quarter of 2026, while repossessions dropped 17% to 1,150. Buy-to-let arrears also decreased by 22% annually, though repossessions in that sector rose 10% over the previous quarter.

This resilience comes as the Bank of England raised the base rate from 3.75% to 4%, the first increase in over three years. While 87% of homeowner mortgages are currently fixed, approximately 2.3 million deals expire in 2027. With inflation expected to peak at 5% in the second quarter of 2027, analysts warn that upcoming refinancing may expose more borrowers to higher costs.