The study looked at how much and for how long FTBs planned to save for their deposit. It found the average FTB expected to save almost one-third more than they actually would in the time they allowed themselves. A FTB ideally wants to save nearly £12,000 over two years, about 8 per cent of the average FTB house. Yet, they only planned to save around £270 a month, leaving them with a shortfall of over £5,000.
In reality, FTBs would have to save nearly £500 a month or save for a longer period. Yet, A&L revealed 30 per cent of potential FTBs were not saving for a deposit at all, despite having aspirations of getting onto the housing ladder within the next two years.
Richard Taylor, head of mortgages at Alliance & Leicester, said: “There is a clear mismatch between how much, and for how long, first-time buyers are willing to save and their ideal target deposit to buy their first property. A decent deposit is not completely out of reach as first-time buyers could save a 5 per cent deposit in the timescale they have set themselves. But if house prices continue to increase, it is in the interest of hopeful first-time buyers to make saving for their deposit a priority.”
Andy Frankish, managing director of Mortgage Talk, said: “I’m not surprised by the findings. If you go deeper, there’s a lack of general financial understanding and people go through their 20s now with very little financial education at all. It’s a ‘buy now, worry later’ society. There is a definite need for financial education at a younger age. What’s good is that mortgage lenders are using this information and designing products to help get first-time buyers on the property ladder.”
