With UK market conditions continuing to make it difficult for would-be home owners to get a foot on the property ladder, the average age Brits expect to be able to buy their first property is now 37 years old, according research from MoneySupermarket.com.
UK adults who do not currently own a property were asked at what age they expect to be able to buy one, and a staggering 41 per cent, some eight million Brits, claim they do not intend to buy a property at all.
The number of mortgage products available to first time buyers currently stands at just 1,337, a drop of 187 products since this time last year. Prior to the credit crunch there were 14,940 available in July 2007; underlining how conditions have changed for those trying to get onto the property ladder. The average loan to value (LTV) for products available to new buyers is 78 per cent which means someone taking out a mortgage on a £150,000 property for example would need a deposit of £33,000 – well beyond the means of most first time buyers. However, there is still good news for those taking the property plunge – the number of mortgages available for those with only a 10 per cent deposit is currently 209, up 20 per cent on 2011, and the average interest rate for these mortgages has dropped by 1.14 per cent since April 2009.
Clare Francis, mortgage spokesperson at MoneySupermarket.com said: “Home ownership is a really big thing here in the UK. For years it has been something millions of people aspire to and therefore it’s surprising to see that this may be changing and that some people are giving up on the hope of ever owning their own home.
“To a certain degree it is perhaps understandable. Despite a stagnant housing market in many areas of the country, property prices remain exceptionally high. Coupled with this, mortgages remain hard to come by with the number of loans available to those with a small deposit well down on the pre-Credit Crunch days. Rising living costs are also making it harder for aspiring first time buyers to save that all important deposit.”
Saving for a deposit
When those with an idea on when they would buy were asked how they planned to pay for the deposit on their new home, 40 per cent say they will rent until they have saved enough. Just nine per cent of would-be homeowners have already saved for a deposit, yet a hopeful six per cent say they will play the lottery for a home deposit over asking their family and friends (five per cent). Six per cent are hoping that house prices will drop further, lessening the amount they need to save.
The research from MoneySupermarket also asked what Brits had been forced to put on hold in their life due to the economic climate, and found that when it comes to property; 17 per cent of 18 to 34 year olds have put off buying a house and delayed this by four years on average.
Francis continued: “Many are taking the decision to rent for longer while they save a large enough deposit to buy their first home. While we have seen an increase in the number of mortgages available up to 90 per cent of the property’s value, the rates on these deals are still higher than if you can scrape a larger deposit together.
“On the plus side the flat housing market means aspiring homeowners can take their time to build up a deposit as they don’t have to worry that prices will become unaffordable if they don’t buy now.
“When it comes to saving for a deposit it’s well worth looking for the most competitive savings rate and consider a cash ISA, as interest is tax free, so that will boost the return. Reviewing personal finances to see where else you can make savings, such as to switch your major bills can help save over £1,000 when using MoneySupermarket and this could be a substantial contribution to the first time mortgage savings pot.”
