Raising a deposit for a house is becoming less of a hurdle for consumers, according to research from the Building Societies Association.
The BSA’s latest property tracker report revealed deposits are now at their lowest level for six years, although they are still cited as the biggest barrier preventing consumers from accessing a mortgage, with 52 per cent saying this was their biggest problem.
However, this figure is down slightly from September, when 59 per cent people said raising a deposit was the major issue preventing them from entering the market.
The survey took in 2,000 UK adults at the end of last month, finding it has become easier to access mortgage finance, with 38 per cent saying it was a barrier in December, compared with 41 per cent in September.
Paul Broadhead, the BSA’s head of mortgage policy, said awareness of government schemes, such as Help to Buy and the availability of higher loan-to-value mortgages, helps to bring choice and competition to the market.
He said: “Now is the time to focus on building more homes, supported by appropriate investment in infrastructure, in order to begin to address the long term imbalance of housing supply with demand.
“Innovative mortgage products and intermediate forms of tenure must also be championed – not just by building societies – but by all lenders, the regulators and government.”
Tony Catt, an IFA compliance officer for TC Compliance Services, told FTAdviser that raising a deposit is often quite difficult because rent is often being paid at the same time, which means there is not much spare income to put aside.
“It may be that it has become a little easier as the banks have started to ease off on their criteria and higher loan to value loans are becoming more available, therefore lower deposits are necessary to get loans.
“It has become more difficult to get loans since the Mortgage Market Review as there has been a major focus on proving affordability. The banks have had rather a knee jerk reaction in this respect and are very strict in this respect,” he continued, adding that there are also no self-certification loans available.
John Stirling, director of Walden Capital, pointed out that many prospective buyers have been saving furiously for quite a long time, meaning more money will be saved, so they will now have the money they need to purchase the home they want.
“On top of this there has been an explosion in pensioners accessing funds as a result of the new pension flexibilities, as well as older homeowners taking funds from their home by way of equity release.
“I don’t think it was too great a leap of imagination to suggest that some of this money is trickling down the generations in a way perhaps first described.”
Daren O’Brien, director of Aurora Financial Solutions, added that the figures shows buyers’ understand the mortgage market and what is expected of them to borrow funds from lenders.
katherine.denham@ft.com
