- One in four (25%) first time home owners were refused a mortgage when they initially applied through their main bank
- Nearly half of first time buyers (48%) said they have had at least one property purchase fall through, this is most common in London (73%)
- Four in 10 (39%) took more than one attempt to buy and for one in 10 (10%) it took three attempts
- Buying a first home is a really difficult process say 89% of prospective first time buyers
- Aldermore offers specialist support for first time buyers, with its 95% LTV mortgages
According to the latest First Time Buyer Index from specialist bank, Aldermore, buying a first home in Britain is still really difficult, despite steps taken by the Government to make the process easier. Of those currently looking to buy their first home, almost nine in 10 (89%) think it is difficult to get on the property ladder – slightly down from August 2017 (93%).
Raising a deposit is still the number one obstacle for four in 10 (40%) of prospective first time buyers, up from 34% in August last year. The number currently living with friends or family in order to save for a deposit has increased, from 23% in August 2017 to 27% in 2018, whilst a further third (33%) would consider it if it meant they could get on the property ladder quicker.
Concern about mortgage affordability has dropped since last year (from 12% to 5%), but for one in 10 (10%) prospective first time buyers, actually securing a mortgage is the biggest concern – this remains on a par with last August (9%). In reality, one in four (25%) first time buyers were refused a mortgage when they first applied through their main bank, with this most prevalent in London where nearly half experienced this (45%).
House buying process
Even when a mortgage has been approved, it doesn’t mean the dream home is just around the corner. Nearly half of first time home owners (48%) said they have had at least one property purchase fall through. This is up significantly from August last year, when only 26% said they had experienced a property purchase fall through, and is most common in London (73%).
Of those who have experienced a purchase fall through, the average loss on fees and other costs was £2,200 – this equates to a cumulative figure of £2.3 billion2 for those who bought in the last 3 years. Four in 10 (39%) took more than one attempt to buy and for one in 10 (10%) it took three. This has resulted in two thirds (65%) of first time home owners having to delay buying their first home, with almost a quarter (23%) having to delay by more than a year.
It is unsurprising therefore that for nearly one in 10 (9%) first time home owners, the general uncertainty of the buying process was the hardest part of buying a house, so much so that for just over half (52%), the process made them ill (70% for Londoners) and for 46% it caused tensions and issues within their relationship.
Positives of owning a house
It’s not all negative though, with almost eight in 10 (79%) saying that owning a home has made them more financially stable which allows them to better plan for the future (83%). For 81%, not having to waste money on rent is seen as a massive bonus. Additionally, most first time home owners feel confident they will be able to move up the ladder when the time comes (81%).
Recommendations to the Government
When thinking about what the government could do to make things easier for first time buyers, 41% believe the seller should pay stamp duty instead of the buyer and 16% would like an abolishment of stamp duty entirely in favour of a different type of tax. A quarter (26%) would like to see more building on the green belt and 23% would like more prefabricated homes available for first time buyers.
Charles McDowell, commercial director, mortgages comments: “It is apparent from our latest Index that the house buying process leaves a lot to be desired. The housing market is in a state of flux and first time buyers are still clearly finding it difficult to get on the housing ladder leaving them anxious, stressed and out of pocket. That said, we have been encouraged by the Government’s renewed focus on the issue of housing with the recent review into the house buying process, although it is too early yet to gauge real impact.
“We believe the real crux to fixing the broken housing market is to improve and increase housing stock. This is echoed by over a quarter (26%) of first time buyers who would like to see more building on the green belt. While the Chancellor announced some measures to build new homes in the Autumn Budget last year, given the government’s record on house building, it is necessary to make some serious progress. We need real action and results, not more consultations and whitepapers.”
1The figures from 2018 are sourced from a nationally representative survey conducted by Opinium Research with a sample of 1,501 prospective first time buyers and 502 actual first time buyers. The sample was restricted to GB adults who were students or in work.
2The comparison figures from 2017 are sourced from a nationally representative survey conducted by Opinium Research with a sample of 1,505 prospective first time buyers and 505 actual first time buyers between 27 July and 3 August 2017. The sample was restricted to GB adults who were students or in work.
On a nationally representative survey of 2,015 adults, 135 had bought their home in the last 3 years, and of which 64% where first time buyers. (135 * 64%) / 2015 * 51,767,000 (UK adult population) = 2,210,363 or 2.2 million recent first time buyers. On the survey of 502 actual first time buyers, 240 had had a sale fall through resulting in £2,202 worth of fees on average. 240 / 502 * 2,210,363 * £2,202 = £2,326,957,485 or £2.3 billion.
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