First-time buyers save £64,000 when they buy instead of rent over five years

First-time buyers are significantly better off buying than renting over the long term, despite ongoing affordability pressures, according to the first-ever Tembo First-Time Buyer Index, launched today by award-winning mortgage and savings platform, Tembo.

The new quarterly index, which analyses proprietary Tembo data alongside official figures, reveals 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.

Key findings from Q1 2026 include:

• First-time buyers are £64,000 better off after five years on average
• The average deposit (£42,324) is higher than a full year’s take-home pay (£39,668)
• Monthly repayments have fallen by £163 year-on-year
• Many buyers need to borrow up to 9 – 10x income to get on the housing ladder, far above typical lending multiples
• Regional divide is stark: Glasgow ranks as the best city for first-time buyers, while London remains the least affordable

However, the findings also highlight the scale of the challenge facing today’s buyers, with rising deposits, stretched borrowing and sharp regional inequalities continuing to hold many back.

The Tembo First-Time Buyer Index is the first of its kind from the company and will be published quarterly, providing a regular snapshot of how accessible the housing market is for new buyers.

Each edition will include 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 – 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).

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.

How do the numbers compare between Glasgow and London?

The index reveals significant regional variation in outcomes for first-time buyers.

• Glasgow ranks as the most attractive city, combining lower borrowing requirements with strong house price growth
• Buyers in Glasgow would be £122,872 better off over five years compared to renting
• London ranks last, with rent consuming over half of income (51%) and loan-to-income ratios reaching 8.3

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.

About Post Author

Sarah Macklin

Sarah is a keen home interiors blogger with an interest in all things property, housing and construction. She's the main writer at Speaking of Housing.