The average age Brits expect to be able to buy their first property is now 38 years old, according research from moneysupermarket.com.
Individuals who currently do not own property were asked at what age they expected to be able to buy and how they planned to pay for the deposit on their new home. A whopping 31 per cent, some six million Brits, claimed they do not intend to buy a property at all.
The number of mortgage products available to first time buyers currently stands at just 1,581, a fraction of the 14,940 available in pre-crunch Britain in July 2007. Over the last year, the number of first time buyer products available has risen by almost 200, offering some hope for those trying to break into the housing market. There has also been a 47 per cent increase in the number of mortgages available up to 90 per cent Loan to Value (LTV), and the average interest rate has dropped by 2.43 per cent since July 2007, bringing more welcome news for first time buyers; however these changes don’t tell the whole story. The average LTV for products available to new buyers is 77 per cent, meaning someone taking out a mortgage on a £150,000 property would need a deposit of £34,500 – well beyond the means of most first time buyers.
Clare Francis, mortgage spokesperson at moneysupermarket said: “The housing market has been hugely affected by the credit crunch and economic downturn, and first time buyers have been hit the hardest. It’s easy to see why nearly a third of non home owners do not intend to step foot on the property ladder. House prices may have fallen in many areas but they are still high. This coupled with the need for such a high cash deposit is pushing many people out of the market. There is still limited choice if you have a deposit of less than 10 per cent, and the rates on these mortgages are around 5.30 per cent, which is significantly higher than the most competitive rates. This also means that the monthly repayments first time buyers face are often higher than for those who have larger deposits to put down. “
“For anyone wanting to get on the ladder, who is renting or living with parents, it’s important to think about how they can make cutbacks to help them build up a deposit more quickly.”
Saving for a deposit
A substantial 19 per cent of those not currently on the ladder plan to rent until they have saved enough for a deposit. The number of people stuck renting until they can afford to buy is highest in the West Midlands, with one in four (25%) playing the waiting game, compared to just six per cent in Northern Ireland. Due to hugely inflated house prices in the capital, Londoners are the least confident about their purchasing power, with the average age they expect to be able their buy their first home standing at a staggering 43 years old.
When it comes to paying for a deposit, five per cent of those waiting to buy currently have enough money saved, whilst six per cent are hoping that house prices will drop further, lessening the amount they need to save. Shockingly, more respondents planned to play the lottery to pay for a deposit (5%) rather than asking for help from family and friends (4%).
Clare Francis continued: “The fact some people are playing the lottery rather than turning to friends and family for help illustrates how squeezed the nation’s finances are at the moment. According to Halifax, average property prices fell by 1.4 per cent in April 2011, so in a lot of ways it should be a great environment for first time buyers. But the difficulty many are having saving for a deposit coupled with the ongoing shortage of competitively priced mortgages for those with small deposits means the market remains extremely tough. However, on the plus side, there is no rush to buy as the housing market looks set to remain subdued for the foreseeable future. Therefore aspiring homeowners can take their time to save that all important deposit without the fear that house prices are going to soar out of reach.
In order to do that, would-be first time buyers should take the opportunity to seek out the highest paying savings account and look to get into the habit of putting money away regularly. It’s also worth looking at ways to free up more cash such as using discount vouchers and making sure there are no unnecessary costs being incurred. That way, they’ll have more to save and will be able to afford their first home sooner.”
Source : moneysupermarket.com
