As we head into early summer 2025, the outlook for Lancaster’s first-time buyers still feels challenging. The average deposit for a UK first-time buyer in 2024 was a staggering £61,000—putting homeownership out of reach for many. With rents rising and the cost of living squeezing savings, it’s no wonder so many feel priced out of the market.
Most affordability debates lean on the house price-to-earnings ratio (HPER)—and yes, it’s gone up. In 1983, the North West HPER was just 2.39. Today it’s 3.98. At face value, it looks like homes are far less affordable.
But let’s look deeper.
What Does a Lancaster First-Time Buyer Pay Today?
The average first-time buyer property in Lancaster costs £185,300. With a 5% deposit (£9,265) and a 95% mortgage at 4.29% over 29 years, monthly repayments come to around £884.93.
That’s a big number, but it’s not the full picture.
Instead of focusing just on house prices vs. salaries, we should consider mortgage payments as a percentage of take-home pay. Why? Because this measure reflects the actual financial burden of homeownership—including tax, interest rates, and income changes. It’s the number that lenders and buyers alike really care about.
A Look Through the Years
Let’s rewind. In the late 1980s, interest rates skyrocketed to 15%. Mortgage repayments soared, and many first-time buyers were pushed out of the market entirely—or trapped in unaffordable loans. The housing crash that followed led to repossessions and sharp house price drops.
Things stabilised in the mid-1990s with lower interest rates. But in the 2000s, house prices shot up again—rising 10–18% annually. Although rates stayed relatively stable (4.5–6%), mortgage costs swallowed an increasing share of income. By 2007, affordability was stretched thin.
Then came the 2008 financial crash. 🏦 Rates were slashed, and although prices began rising again, mortgage payments as a share of income fell—creating a strange disconnect. Homes looked expensive on paper, but monthly costs were actually quite manageable.
The Covid Boom & Its Aftermath
In 2020 and 2021, the “Covid boom” saw house prices spike as people re-evaluated where to live. Demand surged, especially with interest rates staying low.
But in mid-2022, inflation returned—and with it, rate hikes. Mortgage payments jumped, and both HPER and the mortgage burden rose again. By mid-2023, first-time buyers were spending an average of 29.6% of their take-home payon mortgages. 📈
That sounds high—but let’s compare:
1989: 35.5%
2007: 37.1%
2015: 20.3%
Today (North West): 27.5%
So yes, it’s tougher now than in 2015, but easier than 2007 or 1989. That matters.
The Outlook for 2025
The good news? Things are improving.
Mortgage rates are no longer climbing—and could start falling. Real wages (after inflation) are rising too. So while the HPER still sounds scary, the monthly burden is easing.
This is key: when lenders assess your affordability, they don’t just look at house prices. They focus on how much of your monthly income goes towards the mortgage. That’s why this measure—mortgage as a percentage of take-home pay—is the one to watch.
Final Thoughts
So, to Lancaster’s first-time buyers—and their parents helping with deposits—don’t get discouraged by the headlines. House prices may still be high, but the actual affordability is slowly improving.
Keep your eye on what really matters: your monthly mortgage cost versus your income. That’s the measure that reflects your financial reality—and it’s moving in the right direction.
Let’s talk about it—what’s your experience as a buyer in Lancaster? 🗣️
My name is Michelle Gallagher. You can email me at michelle@jdg.co.uk or call me on 01524 843322
Thanks for reading
Michelle x
