First-time buyers spent less on a mortgage compared to earlier this year: experts

The affordability of homes for first-time buyers has seen a slight improvement after years of deterioration, experts from ING research indicated in a report published on Thursday. In the third quarter of 2023, first-time homebuyers spent on average a smaller portion of their income on mortgage costs than they did in the first quarter of the same year.

In the third quarter of 2023, it was estimated that first-time buyers allocated an average of 30.4 percent of their disposable income to net mortgage costs during the first year of purchasing a home. This figure was 31.8 percent in the first quarter.

The bank highlighted the strong wage growth since the start of the year and the reduction in net mortgage costs resulting from decreased house prices. However, ING also observed that the proportion of income that a first-time buyer dedicates to net mortgage costs remains "historically high." They emphasized that affordability has been on a downward trend since 2016 when a first-time buyer was estimated to spend roughly 19.5 percent of its disposable income on monthly net mortgage costs.

The ING experts anticipate that the affordability will remain stable until the end of the year due to the combination of rising wages and increasing mortgage costs. Little variation is expected for next year, as wages are expected to grow, yet at a slower rate than this year. At the same time, house prices are likely to increase, and interest rates might see a small decrease.

This combination of factors is predicted to keep the proportion of income that first-time homebuyers allocate to net mortgage costs stable. Affordability remains therefore very unfavorable for the time being,” the experts concluded.