Help to Buy slashes average home deposits

The new homes director of London-based Mortgage Advice Bureau, said: “Help to Buy equity loans have been instrumental in helping those who cannot afford a hefty deposit to buy their own home by encouraging them to explore the new-build market.”

Analysis by MAB shows the loans have cut the equivalent of 19 months’ worth of take-home pay for homebuyers raising a deposit. By contrast, the average deposit for a homebuyer across the whole mortgage market adds up to more than 18 months’ income, amounting to 158 per cent, the equivalent of more than two years’ take-home pay.

According to the independent mortgage broker, during March the average homebuyer put down a deposit of £61,325, while equity loan applicants put £50,261, including the government loan as well as their own contribution.

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By taking out the maximum 20 per cent equity loan to support the average purchase, £187,760, it left borrowers who use the scheme needing just £13,031 in upfront capital for their deposit. This amounts to 41 per cent, less than half of their typical annual income or just over six months’ worth of take-home pay.

Mr Frankish said: “Part one of Help to Buy has a clear remit to broaden access at the lower end of the property ladder to younger buyers, and the scheme is clearly delivering this aim.”

Adviser view

Dominic Basilea, director of Hertfordshire-based Aqua Wealth Management Limited, said: “I can agree that it has helped. But with the mortgage market review coming into play, we are back to where we were.

“It’s getting more difficult to apply for a mortgage, with underwriting guidelines more difficult. Property prices have increased considerably, which has created issues for first-time buyers.”