Many first-time buyers are struggling to secure a mortgage due to the impact of the current cost-of-living crisis and rising inflation eroding their finances.
This is according to a survey by mortgage lender, Aldermore, which also uncovered evidence deposit saving was taking much longer than anticipated.
The study of 2,000 prospective first-time buyers found, on average, those embarking on homeownership planned to save £43,500 for a deposit.
But it emerged many were saving into low-interest accounts, which may also be contributing to the difficulty in saving.
Aldermore found, while half of prospective first-time buyers were using savings accounts which offered higher rates of interest, a ‘concerning’ amount were holding their savings in low-interest savings vehicles.
Indeed, 44% were using current accounts, despite the current high-inflation environment eroding the real-term value of these savings.
Additionally, nearly one in 10 were relying on cryptocurrency to generate deposit funds, despite its considerable volatility.
Cost of living crisis
Rising living costs have become a greater barrier to purchasing a home, with seven out of prospective first-time buyers impacted by the ongoing crisis, the survey found.
This has delayed a third (32%) from buying a property and realising their homebuying dreams, with delays of 20 months on average.
Nearly two-thirds of all first-time buyer hopefuls have had to scale back their regular savings and this would have been likely to have incresed the time it took to get on the property ladder.
One in five admitted they had to opt for looking for a cheaper home.
Jon Cooper, head of mortgage distribution at Aldermore said: “While saving in this current economic climate may feel like a long and arduous journey, we’ve found that the majority of determined first-time buyers think the difficulties are ultimately worth it in order to get on the property ladder.
“It’s important that prospective buyers are aware of the support available to them. Would-be buyers should consider seeking advice from a broker who can lend a helping hand and guide you through the process of becoming a homeowner.”
