· Over a half of Brits feel property prices are rising faster than they can save
· 50% of us are struggling to save a deposit because we have debts to pay
Over half of us (51%) feel property prices are rising faster than we can save and a half (50%) are stuck paying off our debts whilst struggling to save for a deposit.
The First Time Buyer Report, commissioned by The MarketPlace at Bradford & Bingley, reveals that with spiralling property prices and increased debt first time buyers are getting older, taking out larger mortgages and increasingly relying on others – spouses, parents or friends – to help them get on the property ladder.
KEY FINDINGS:
The changing face of the first time buyer…
- Over a third (36%) of first time buyers are aged 30 plus – 19% are aged 30 to 34 and 17% are 35 or over
- 1 in 4 (24%) take four to six years to buy their first home, with 16% taking 7 years or longer
- 17% are relying on their parents to help them with the deposit while 8% are buying with their friends or family. The vast majority of these (95%) because they can’t afford to buy the property by themselves.
- A third (33%) expect to spend between £95,000 and £145,000 on their first home, while 16% will spend between £145,001 and £195,000
David Bitner, head of product operations at The MarketPlace, commented: “The booming property market which has forced up prices and the “buy now, pay later” culture which has left many consumers with more debt than savings, has meant that many first time buyers have no choice but to wait to get onto the property ladder.”
Difficulties facing prospective buyers…
- 54% are struggling to buy a home due to price rises
- 51% feel prices are rising faster than they can save
- A half (50%) are still paying off debts while struggling to raise a deposit
- 28% have little or no savings and are struggling to save for a deposit while paying rent
- Almost a quarter (22%) have given up on the idea of saving altogether and are pinning their hopes on a 100% mortgage
- 25% are stretching themselves so far financially to buy a property that they have little or no money left for furnishings
Bitner continues: “Our research reveals just how tough first time buyers are finding it at the moment. Many are struggling to save for a deposit whilst paying rent and trying to clear off their debts and for every year they keep saving, property prices are rising that bit higher. With such a catch 22 it’s not surprising many have had to hold off buying.”
First time buyers are struggling to raise a sufficient deposit…
With the average first time buyer property now costing £93,925<=, research shows:
- Only 21% have saved between £6,000 to £10,999. To service a 10% deposit borrowers would need just under £9,500.
- 27% have saved between £1,000 to £5,999. To service a 5% deposit borrowers would need just over £4,500.
- 8% have savings below £1,000
- Whilst 15% have no savings at all!
Bitner says: “There is clearly an expectation gap between what people are saving and what they need to save in order to build a sufficient deposit. With the average property price now standing at over £90,000, borrowers need to be looking at saving at least £4,500 to service a 5% deposit. The results show though, that many are falling considerably short of this.”
First time buyers want flexibility….
To help them catch the property they really want the majority of first time buyers (67%) think lending limits should be much more flexible, based on what people can afford rather than strict income multiples.
Bitner concludes: “We believe lenders should review their current criteria to give first time buyers a break and help them get onto the property ladder. We would never advocate borrowers over-stretching themselves; however, we think lenders should base their criteria more on affordability rather than income multiples that have remained unchanged for over two decades, despite borrowing conditions improving.”
The MarketPlace has produced a booklet ‘Helping you buy your first home’ which offers first time buyers some invaluable information on the range of specialist mortgages available and details of the key things to think about. Borrowers can request a copy by phoning The MarketPlace free on 0800 11 33 33.
