The majority of prospective first-time buyers are delaying their home purchasing plans as mortgage rates and living costs rocket, new research commissioned by Leeds Building Society has suggested.

The research, published today, involved a nationwide survey of more than 4,000 people and was conducted by Censuswide in late October following the Truss government’s ‘Mini’ Budget and ahead of the further 0.75 per cent interest rate rise agreed by the Bank of England in early November.

It found that 60 per cent of those looking to buy in the next five years have decided to delay their purchase because of the rising cost of living (21 per cent), higher mortgages rates (19 per cent) and falling house prices (20 per cent).

Of those that have decided to delay their purchase, almost nine in 10 (89 per cent) say it will be for six months or more – and the average expected delay in buying is 18 months.

First-time buyers are delaying potential purchases due to rising mortgage rates and increases in other living costs, new research has found.

People have done so in the hope that the economy will have improved enough to make buying more affordable then, suggesting they don’t have confidence in short term improvements to the economic climate.

The survey also found 81 per cent of first-time buyers said that it has become hard to save for a deposit because of increases in the day-to-day cost of living. Over a third (36 per cent) have been forced to cut back on the amount they can save towards a deposit and 10 per cent have had to stop saving altogether.

One in five first-time buyers said that they’d had a mortgage offer withdrawn and cannot get another.

Leeds Building Society said the situation highlights the need for the Government to make a “stronger case” for its Shared Ownership initiative. This government scheme lowers the deposit required as users effectively buy part and rent part of their home.

Shared owners are younger and more likely to be sole occupants, giving them the opportunity to grow their equity over time.

Richard Fearon, CEO of Leeds Building Society, said: “The findings from our research are stark but clear: the home ownership dream in the UK is in crisis. Houses have never been less affordable, and the cost-of-living crisis and the recent increases in interest rates are a further blow to those hoping to buy.

“In the short term, a stronger case needs to be made for Shared Ownership to help more people get the keys to their first home. The key advantage of Shared Ownership is that buyers need a smaller deposit, potentially allowing them to buy sooner than they might otherwise. There is a clear lack of awareness about the benefits of Shared Ownership and lenders, brokers and estate agents all have a role to play in changing that.

“However, delivering meaningful change to the housing market requires a number of more structural issues, including building more homes.

"That’s why we’ve published our ‘Housing Roadmap’ of seven changes that need to happen so create a housing market that functions for everyone.”

The society’s ‘Tackling the UK’s Homeownership Crisis’ roadmap sets out the seven changes it believes are needed in the housing market. It said Shared Ownership should be expanded, as it only currently makes up one per cent of housing in the UK.

The report also calls for the Government’s Lifetime ISA scheme to support first-time buyers build their deposit savings to be repackaged as part of raising awareness of its availability.

Home ownership dream 'in crisis' as first-time buyers delay purchases, Leeds Building Society boss warns