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Young homebuyers are facing huge challenges when it comes to getting on – and staying on – the housing ladder.

Nicola Webb, a 34-year-old nurse, felt she had little choice but to opt for an ultra-long mortgage when purchasing her first home last year.

It’s set to end when she is 68, but she says stretching out the repayments is “the only way I can just about afford my mortgage as a single homeowner”.

“I’ve not known lower mortgage rates so I just accept what it is.”

Despite the fact that she managed to save a chunky deposit for her £147,000 two-bedroom flat in Gloucestershire, Nicola’s five-year fixed rate mortgage costs £598 a month – about a third of her monthly wages after tax and student loan deductions.

Once her student loan is paid off – or eventually written off – she hopes to reduce the length of her mortgage term from 35 years, or look at using any extra disposable income to overpay it.

She says she’s grateful she has been able to get on the housing ladder at all. While mortgage costs take up a large part of her income, she thinks it is still cheaper than renting in her local area.

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A mortgage scheme designed to increase the number of deals available to homebuyers with a low deposit or limited equity is running until mid-2025. Several major lenders are taking part in the Government’s mortgage guarantee scheme, where want-to-be homeowners have access to 95% mortgages. However these are not special mortgages and they’re certainly not the cheapest – here’s what you need to know.

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Three UK banks have announced cuts to the cost of fixed-rate mortgages, reversing some of the price rises seen in recent weeks.

Barclays Bank has announced it will reduce the price of five-year fixed-rate deals for new borrowers and remortgagors by up to 0.45 percentage points from Friday. Its five-year fixed-rate for borrowers with a 40% deposit is decreasing from 4.47% to 4.34%.

At HSBC there will be cuts to two-, three- and five-year home loans, and the bank has withdrawn the 10-year fixed-rate mortgages it offers to remortgage customers.

TSB will also make changes on Friday, and cut two- and five-year deals for house purchases by up to 0.10%.

In recent weeks lenders had been increasing the price of mortgages as the prospect of a spring interest rate cut from the Bank of England receded.

However, money market “swap rates” on which most fixed-rate deals are based have started to fall this week.

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “This latest round of mortgage rate reductions from some big lenders is great news for borrowers.

“They come on the back of a decline in swap rates, which underpin the pricing of fixed-rate mortgages, over the past week.

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Support for the housing market, particularly in terms of support for homebuyers, often tends to be couched in terms of stamp duty reform or, more recently, a replacement for Help to Buy, or a further extension of the government’s mortgage guarantee scheme.

However, you might well argue that for certain borrower demographics – perhaps first-time buyers – this feels a little like tinkering around the edges, although who wouldn’t want to see more affordable housing built, particularly in the house price, wage and rental environment we currently have?

Clearly, there remain some – often insurmountable – hurdles for would-be first-time buyers, not least in terms of their ability to get on the ladder, especially if they don’t have the support of parents or grandparents, or if they want to own a home in fewer than five years. 

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The Bank of England says one in four mortgages will end when the mortgage borrower is in retirement, as more people extend mortgage terms to make repayments more affordable.

The Bank says over half (51%) of mortgage borrowers now opt for a 30-year mortgage or longer, while between 2021 and 2023, the average mortgage term length for a first-time buyer increased by a year, from 28 years to 29.

Remortgaging has seen the biggest increase in average term length: in 2021 the average mortgage term for remortgaging was 21 years, whereas by 2023, the average mortgage term for remortgaging increased to 23 years, an increase of two years.

The average property now costs seven times the average person’s salary. This is significantly higher than the four-to-five times salary cap that many mortgage lenders use as a guideline.

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Since mortgage rates began rising, many of the nine million mortgaged households in the UK and close to two million landlords have been faced with the prospect of much higher payments.

Many had become accustomed to ultra-low interest rates for more than a decade.

In this six-part series, we look at how much more people are really paying when they take out a new mortgage, how households are coping and if a mortgage crisis is afoot.

Here we look at whether a mortgage crisis could still unfold over the coming months and years. 

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Are you torn between taking out a two-year fixed rate mortgage or a five year fix? If so, you have come to the right place.

This is a question which many-a would-be buyer and remortgaging homeowner is pondering at the moment and it’s no wonder.

As you will no doubt be aware – it’s a bit of a conundrum.

Here’s the problem. A two-year fix is more expensive – new data out just this week from Moneyfacts shows the average two-year fixed rate is 5.91% whilst the five-year version is 5.48%. The cost difference in repayments for the two can amount to hundreds of pounds.

But whilst you will pay more to fix for two years, with predictions interest rates might fall later this year, would the cheaper five-year option confine you for the long haul, and prevent you benefiting from even lower rates in the future?

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NatWest is increasing the cost of selected two and five-year fixed-rate residential mortgages by 0.05 percentage points. The increase will be applied on deals for home purchase, including first-time buyer rates, and for remortgage, effective tomorrow (Wednesday).

The move comes despite falls in wholesale interbank borrowing rates, which suggests NatWest is attempting to control demand for its products so as to be able to maintain service standards, and not responding to fears that borrowing costs generally are set to remain high.

There is a growing expectation that the Bank of England will trim the Bank Rate from 5.25% at some point over the summer.

NatWest already increased rates for new borrowers in April and hiked the cost of product transfer deals (available to existing customers coming to the end of a deal and looking for a new rate) on 8 May.

Its two-year fixed rate for home purchase will now increase from 4.77% to 4.82% (60% LTV) with a £1,495 fee. The five-year equivalent rises from 4.4% to 4.45%.

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