The Financial Times Adviser contacted me recently for a comment on recent research from Santander. The research suggests that first-time buyers have to work much harder to raise a deposit for their first home – or have resigned themselves to never being able to afford one.
But times are slowly changing and you may be surprised what you can afford.
No room at the inn
Average house deposits have reached £37,375 or 17% of the overall property value. The FT article highlights that almost one third of aspiring homeowners have taken second jobs or are working overtime to save up this sort of money.
27% of those who want to buy in the next 5 years would consider taking out a personal loan to raise a deposit, compared with only 4% in 1999. And a third of all people who do not currently own a home think that they never will.
This is no surprise to us at Limetree. As I told the Financial Times, it has become very difficult for first-time buyers to finance their deposit. In our area, there has been a huge increase in inheritance money being used to pay for a home deposit. About a quarter of our business finances the deposit this way, compared to a fifth who rely on savings.
Good tidings of great joy
All is not doom and gloom. The market is slowly brightening up. A few lenders now require only a 5% deposit and others have moved from 15% to 10% deposits within the last couple of weeks. Santander themselves have a range of 10% LTV mortgages.
Also, the rates on high loan-to-value products have started to soften since earlier in the year as more lenders enter this market. These mortgages are often restricted in size and lending areas and will require the applicant to be of a good quality. But better deals are beginning to come through.
Perhaps if you’ve been despairing about unattainable deposits it is time to review your options? If you want to find out, give us a call.