Broker warns of FTB deposit surge
A mortgage broker has warned that first-time buyer deposits could surge over the next ten years.
Having analysed figures from the Office for National Statistics House Price Index, L&C Mortgages have looked at the average first-time buyer deposits paid across the UK, as well as their mortgage.
For an average property, figures from the ONS indicate that FTBs will borrow around £160,591 to afford a home costing £212,411. On this basis, the required deposit would be approximately £51,820 – a figure the broker warned could rise by up to 57% over the next decade in light of house price growth trends.
The broker also stated that the significance of growth could be even higher in certain areas, anticipating that deposits in London could rise by as much as 75% by 2027.
Where funding the deposit was concerned, the research looked at the predictions of prospective buyers, with just under half (44%) taking the view that it would come from their own cash savings. An additional 15% expected that they’d use a Help to Buy ISA, whilst 11% hoped that their family members would contribute.
Commenting on the results of the research was David Hollingworth. The mortgage adviser at L&C stated: “With this research predicting that the size of deposits required could rise considerably across the country, first-time buyers could be forgiven for giving up hope on owning their first home.
“There is some stark variation between cities, but the fact that London deposits could be almost hitting a quarter of a million pounds by 2027 is alarming.
“It makes sense for first-time buyers to try and raise as big a deposit as possible but that is very much easier said than done in today’s current climate.
“Although there are mortgage deals available to as much as 95% of the property price, rates on these types of deals will be higher than for those who have saved a larger deposit.
“Given the level of commitment that first-time buyers are having to make, it’s of little surprise that they are often electing to fix their mortgage rate so they know where they stand with their mortgage payments.”