A third of first-time buyers have missed out on purchasing a property due to their deposit being too small to secure a mortgage.
The research from Nottingham Building Society revealed that in the last year, small deposits resulted in house sales falling through for around 35% of prospective first-time buyers, despite over half having more than 10% of the purchase price. Just 18% stated that their deposit was under 10%, whilst 17% had an amount saved which was less than 20%.
According to figures from the Council of Mortgage Lenders, over 338,900 were completed last year, with total borrowing for those trying to get onto the property ladder reaching £53.2 billion – a record high. The current loan-to-value, on average, is around 84.3% on loans of £132,400.
However, the research from Nottingham Building Society indicated that first-time buyers were still having trouble accessing the housing ladder. 51% stated that before they’d started to look for a home, they had a deposit saved.
Commenting on the figures was Ian Gibbons. The Senior Mortgage Broking Manager at Nottingham Mortgage Services stated that the size of their deposit shouldn’t impact a buyer’s ability to obtain a mortgage.
“Borrowers with small deposits have a wide choice of loans to pick from but clearly many are struggling to buy the houses they want with so many potential deals falling through.
It is particularly worrying that borrowers with a 10% deposit or more are struggling. They should be able to secure a mortgage and not have to miss out on house purchases simply because their deposit is too small.
The withdrawal of the Help-to-Buy mortgage guarantee scheme will have some impact but in general, the advice is always to search the market and get specialist advice on the range of options available.”
