The average homeowner deposit has gone up a staggering 33% in the last eight years, highlighting the growing difficulty first-time buyers face getting on the property ladder.
According to figures from Lloyds Bank, rising house prices have been a key factor in driving up average homemover deposits to £97,000 – up £24,000 since 2009.
In the past year alone, the average deposit has grown by 6% to £5,640.
This means the average national deposit is equivalent to 33% of the average price of a typical homemover property, down from 36% in 2009.
The average deposit put down by homemovers is now more than £100,000 mark in East Anglia, the South West, the South East and London.
In London, homemovers are on average putting down £192,500 to move to the next rung of the housing ladder, an increase of 74% since 2009.
By comparison, homemovers in Northern Ireland have seen average deposits fall by over a quarter from £60,409 in 2009 to £45,371 – the lowest in the UK.
Despite record low mortgage rates, the number of homemovers has fallen for the first time in five years.
The number of homemovers is estimated to have reached 354,000 in 2016 – down 4% from 2015.
In 2016 the average house price paid by homemovers increased by 7% from £273,510 in 2015 to a record high of £291,777. Since falling to £199,645 at the depths of the housing downturn in 2009, the average price has grown steadily by 46%.
Andrew Mason, Lloyds Bank mortgages director, said: “Despite favourable economic conditions including record low mortgage rates, high employment levels and rising real pay growth, the number of homemovers fell in 2016 for the first time in five years.
“Whilst higher prices will have lifted equity levels for many current owners, the low availability of the ’right type‘ of homes for those looking to move up the housing ladder may have constrained market activity. Of course, higher prices may explain why more homemovers are opting for longer mortgage terms.
“The ability of homemovers, particularly those in their first homes, to move on is an important component in the housing market as it increases the supply of properties, providing homes for new first-time buyers.”
Long-term mortgages
Longer mortgage terms have also grown in popularity with homemovers over the past decade, with many choosing a home loan which extends beyond the traditional 25-year term.
In 2006, more than four out of five (83%) homemovers had a mortgage term of between five and 25 years, whilst the remaining 17% were for over 25 years. By 2016, 39% of mortgages were for a term of between 25 and 35 years, while the number of mortgages for terms of five years up to 25 years fell to 61%.
Record low mortgage rates have helped reduce this cost as a proportion of homemovers’ overall outgoings. In the final quarter 2016, mortgage payments accounted for 38% homemovers’ disposable earnings – close to the long-term average figure of 40%. This is a substantial improvement since the peak in summer 2007, when average mortgage outgoings accounted for 57% of homemovers’ disposable income.
