A groundbreaking quarterly index has revealed that first-time buyers are on average £7,600 better off after one year and £64,000 better off after five years compared to those who continue renting and invest their deposit elsewhere.
New index tracks housing accessibility
The Tembo First-Time Buyer Index is the first of its kind and will be published quarterly, providing a regular snapshot of how accessible the housing market is for new buyers. Each edition includes an overall 'attractiveness score' designed to track whether conditions are improving or worsening for first-time buyers over time. The score for Q1 2026 is 637, indicating very high and broad accessibility.
The index combines data on affordability, deposits, borrowing power, mortgage costs and regional housing trends, drawing primarily on proprietary data from Tembo's customer base, alongside sources such as the Office for National Statistics (ONS).
Falling mortgage rates boost affordability
Despite stagnant incomes, falling mortgage rates have improved affordability in the short term. The average first-time buyer mortgage rate dropped to 4.48%, its lowest level in more than two years, reducing monthly repayments and bringing housing costs below 30% of income for the third consecutive quarter.
However, upfront costs remain a major obstacle. Saving for a typical deposit now takes over a decade for many buyers, assuming modest saving rates. At the same time, most buyers are entering the market with existing debt, with 80% carrying an average balance of £9,277 in loans prior to purchase.
Regional variations
While more affordable cities such as Hull, Derby and Stoke offer lower barriers to entry, higher-growth cities like Manchester, Bristol and Edinburgh continue to attract buyers despite greater financial pressure.
Richard Dana, CEO of Tembo, said: "First-time buyers are facing one of the toughest markets in decades, with higher deposits, rising living costs and stretched borrowing requirements. But what this data shows clearly is that, over time, buying still significantly outperforms renting for most people. Trying to time the market perfectly is incredibly difficult. What matters more is getting on the ladder when you can and staying there. With this new index, we want to give would-be first time buyers clearer, data-driven insights to help them understand their options and make more confident decisions."
