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Exodus of first-time buyers puts brakes on UK housing market

First-time buyers pulled back most from purchasing a home after the increase in mortgage costs following the mini-budget, according to a report showing a widespread slowdown in the property market.

Figures from the property platform Rightmove show buyer demand fell 20% in October compared with a year ago, as house-hunters put their property searches on hold in response to soaring borrowing costs and rising economic uncertainty.

Interest rates shot up last month after Liz Truss’s mini-budget, adding hundreds of pounds to mortgage payments. About a year ago, the average new two-year fixed rate was priced at 2.25%, but in recent weeks new rates have leapt above 6%.

Rightmove’s monthly house price index showed first-time buyers were the most hesitant, with demand down 26% in October. Demand from “second steppers” hoping to move from their first home was down 17%, while interest among those at the top of the property ladder was down 15%.

Research from the Royal Institution of Chartered Surveyors published last week revealed that new buyer inquiries fell for the sixth month in a row in October, and survey feedback on buyer demand was negative across the UK. It now takes 18 weeks on average to sell a property, up from 16 weeks typically a year ago.

However, despite the drop compared to last year’s figure, Rightmove said buyer demand was still up 4% on 2019’s pre-pandemic levels.

Tim Bannister, Rightmove’s director of property science, said: “Though many are getting on with moves, especially those with a purchase already agreed, understandably, there are people who are pausing for thought.

“There’s a group ready and able to move and waiting on the sidelines for more financial certainty. Then there’s a group of first-time buyers or people hoping to trade up who were already stretching themselves financially and may now have had their plans dashed.”

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