First time buyer deposits have fallen by ten per cent in 12 months, according to new figures.
May saw the figure stand at £24,637, £2,700 less than one year ago, but still needing eight months’ salary, the fourth consecutive month in which the average first-time buyer deposit was below £25,000.
Falling deposits mean they are now cheaper as a proportion of wages, with the average first-time buyer deposit representing 67 per cent of a first-time buyer’s annual income in May, compared to 77 per cent twelve months ago.
But the average deposit is still equal to 8 months of the average first-time buyer salary (£37,000).
More lending to high LTV borrowers has pushed up the number of first-time buyers, with 23,400 first-time buyer sales in May signifying a 3.5 per cent increase on the same period a year ago.
The yearly improvement in first-time buyers came despite an increase in purchase prices of seven per cent year-on-year in May to £146,887, more than £9,000 in May 2013.
First-time buyer sales fell 4.5 per cent as lending volume slowed in the wake of the strict MMR regulations, with the average LTV of a first-time buyer resting at 83.2 per cent in May 2014, down 0.4 percent from April.
The latest e.surv Mortgage Monitor showed house purchase approvals fell for the fourth consecutive month in May and first-time buyer sales fell 4.5% as lending volume slowed in the wake of the introduction of the stricter regulations.
First-time buyer mortgage rates are also beginning to creep back up, with the average first-time buyer mortgage rate being 4.09 per cent in May, compared to 4.05 per cent in April and 3.99 [er cent in March. Lenders are starting to raise rates due to growing economic confidence and to slow the rush for fixed-rate mortgages stimulated by recent discussions on an early base-rate rise.
However, house buyers have not been deterred by the new regulations, with demand among first-time buyers remaining strong.
Almost 10,000 loans were given to borrowers with a deposit worth 15 per cent or less of the total value of their property in May, 3 per cent more than in April and 40 per cent higher than a year before.
