Twenty7tec data comments on the state of the First-Time Buyer market and the effects of the energy price increase

Twenty7tec has announced its latest market findings into how the energy price cap increase will affect First-Time Buyers.

James Tucker, founder of Twenty7Tec, explains:

“A working housing market needs a functioning First-Time Buyer market. Together with the active Buy-to-Let market, it allows the rest of the property chain to keep moving smoothly. The energy price cap just announced will dramatically affect those looking to take their first step on the property ladder.

“Last year,  according to Ofgem, the average energy bill for a First-Time Buyer per household would have been £1,339. That was around one-third of one month’s take-home salary for First-Time Buyers. This year, the cap is rising to £3,549 and, according to our figures, now represents around 92.6% of one month’s take-home salary.

“The energy cap rise will eat into First-Time Buyers’ attempts to save for their house-buying deposits, and it will hit those who have already purchased houses.

“Today, an average First-Time Buyer will be buying a home worth £283,154, with a deposit of 23.75%. They’ll be going for a 28-year mortgage and, at the best rate available for them in the market, will be paying £1,004.03 per month for a repayment mortgage.

“So the new energy cap increase is going to hit First-Time Buyer households to the tune of £2,110 per year compared to this time last year – equivalent to two whole months’ mortgage payments.”

The facts from Twenty7tec

On average, over the past month, according to Twenty7tec’s figures, First-Time Buyers:

• • Were buying a house worth £283,154
  • Opted for a 28-year mortgage (51% of mortgages were for terms of 28 years or less)
  • Had a deposit of 23.75%
  • Secured a five-year fixed mortgage at 3.4% (the best rate in the market at the moment for First-Time Buyers)
  • Had an average combined salary of £56,693 (both single and joint applications)
  • For a single person, this equates to take-home pay of £3,448
  • For a couple where one earns £30k and the other £26,683, this equates to take-home pay of £3,833.10. Please note: This is the figure we have used in our calculations.
  • Last year, energy bills were on average £1,339 per small residence according to Ofgem
  • After today’s announcement, the energy cap will rise to £3,549 for the same residence

The results:

• • Last year, annual energy costs constituted 34.9% of one month’s take-home pay
  • This year, annual energy costs constitute 92.6% of one month’s take-home pay
  • Last year, annual energy costs constituted around 6 weeks’ mortgage payments
  • This year, annual energy costs constitute over 15 weeks’ mortgage payments

Kindly shared by Twenty7Tec

Main article photo courtesy of Pixabay