The greater availability of mortgage loans requiring smaller deposits is having a huge impact on the time it takes for first-time buyers to save up.
According to estate agents Hamptons, towards the end of 2016 it would take an average single first-time buyer 11 years and nine months to save a 15% deposit.
But reducing the deposit to 10% cuts three and a half years off the saving time to eight years and three months. For a 5% deposit it takes just four years.
The proportion of loans made at 90% or more was 5% in 2016, up from 3.8% in 2015.
Hamptons said this increasing availability of lending at higher loan-to-values, combined with lower mortgage rates has improved the ability to buy for first time-buyers.
However, saving up for a 15% deposit now takes even longer as result of house prices rising faster than in relation to incomes.
A single Londoner hoping to buy for the first-time would need to save for 18 years and three months to raise a 15% deposit – up from 15 years at the end of 2015. A couple would need 11 years and three months – a year longer than in 2015.
Fionnuala Earley, residential research director at Hamptons International, said: “It still takes an average single buyer nearly 12 years to save a 15% deposit for their first home. That’s a whole year longer than at the end of 2015. But it’s not all bad news. Lenders are increasingly offering higher loan to value mortgages and the rates charged on them have come down more than for any other mortgage type.
“Taking advantage of help to buy or taking out a 90% mortgage means that the time to save a deposit falls substantially. Rather than 12 years, a single buyer can save a deposit in just over eight. And if they use help to buy and save just a 5% deposit, they can save up in just four years.”
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