Mortgages  

First-time buyers unaware of affordable housing options

First-time buyers unaware of affordable housing options
James Forrester, managing director of Barrows and Forrester

First-time buyers are still struggling with increased mortgage deposits, as many are unaware of ways to make the property buying process more affordable, experts have claimed.

While there has been much excitement in the press around predictions that house prices might fall, and reports from Rightmove suggesting the availability of housing stock is slightly increasing, others are still concerned that home purchases are still out of reach for many first-time buyers. 

Research by Barrows and Forrester has shown mortgage deposits for first-time buyers have increased by an average of 41 per cent over the past 10 years, after being adjusted for inflation.

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The estate and lettings agent found the average 15 per cent mortgage deposit for a first-time buyer has increased by more than £10,000 since 2012, even after being adjusted for inflation.

Some popular areas have seen enormous increases. For example, first-time buyers looking for properties in Waltham Forest have seen the highest increase.

For a Waltham Forest property, a 15 per cent deposit for a first-time buyer is 79 per cent higher than it was in 2012, after adjusted for inflation.

Table: The areas with the largest increases in the average first-time buyer mortgage deposit since 2012

Location2012 - Average FTB House Price2012 - 15% Mortgage Deposit2012 - Inflation adjusted 15% Mortgage Deposit2022 - Average FTB House Price2022 - 15% Mortgage DepositChange in 15% Mortgage Deposit
Waltham Forest£219,799£32,970£38,287£457,491£68,62479%
Barking and Dagenham£157,770£23,665£27,482£324,058£48,60977%
Thanet£122,754£18,413£21,382£246,872£37,03173%
Hastings£124,828£18,724£21,744£243,100£36,46568%
Medway£134,285£20,143£23,391£256,875£38,53165%
Bexley£181,760£27,264£31,661£345,828£51,87464%
Thurrock£146,675£22,001£25,549£278,519£41,77864%
City of Bristol£161,622£24,243£28,153£305,508£45,82663%
North Northamptonshire£114,591£17,189£19,961£215,910£32,38762%
Dover£135,646£20,347£23,628£255,563£38,33462%

Source: Barrows and Forrester

Research by Barrows and Forrester showed that Aberdeen, the area of Aberdeenshire, and Inverclyde are the only areas to have had a 15 per cent mortgage deposit for first-time buyers decrease over the last decade.

Managing director of Barrows and Forrester, James Forrester, said: “The outlook is a bleak one for those yet to secure that first foot on the property ladder.

“House prices have soared over the last 10 years, let alone during the pandemic, and so the initial financial hurdle of a mortgage deposit is far, far higher than it was in 2012.

“At the same time, earnings have failed to keep pace, with a sustained period of record low interest rates also making the task of saving a deposit extremely difficult.”

Help-to-buy scheme ending

FTAdviser reported last month that “affordability was seen as the biggest barrier to homeownership” amongst young people, according to a report by SO Resi.

The research also showed that less than one-fifth of young people knew about affordable housing options, as reported by FTAdviser.

The government has some affordable home ownership schemes in place to help first-time buyers in the process of saving for a deposit.

The problem is that first-time buyers are unaware of these schemes. For example, the Help to Buy scheme assists first-time buyers in putting down a deposit.

In the scheme, the government offers an equity loan of up to 20 per cent and 40 per cent for London properties so first-time buyers only need to put down a minimum deposit of 5 per cent.

However, this scheme is due to end on October 31, meaning first-time buyers will have to pay a minimum deposit of 10 to 15 per cent.