Aldermore’s latest First Time Buyer Index1, a survey of 2,000 prospective first-time buyers, reveals many are struggling to secure a mortgage due to the impact of the current cost-of-living crisis and rising inflation eroding their finances.
On average, prospective first-time buyers plan to save £43,500 for a deposit. First-time buyers in London and the South East expect to save the most at £52,777 and £54,570 respectively, with Yorkshire buyers expected to save nearly half of that (£27,379) on average.
When it comes to first-time buyers struggling to save for a deposit, some have criticised would-be buyers for failing to make sacrifices or cut costs to reach their deposit goals.
However, using the nationwide deposit average of £43,500, this would equate to:
While half of prospective first-time buyers (51%) are utilising savings accounts to save for a deposit that typically offer higher rates of interest, a concerning amount are holding their savings in low-interest savings vehicles, with two out of five (44%) using current accounts, despite the current high-inflation environment eroding the real-term value of these savings. Additionally, nearly one in 10 (8%) are relying on cryptocurrency to generate deposit funds, despite its considerable volatility.
Rising living costs have become a greater barrier to purchasing a home, with seven out of 10 (72%) prospective first-time buyers impacted by the ongoing crisis. This has delayed a third (32%) from buying a property and realising their homebuying dreams, with delays of 20 months on average. Nearly two-thirds of all first-time buyer hopefuls have had to scale back their regular savings (64%), likely increasing the time it takes to get on the property ladder, while one in five (19%) have had to opt for looking for a cheaper home.
Jon Cooper, head of mortgage distribution at Aldermore said: “While saving in this current economic climate may feel like a long and arduous journey, we’ve found that the majority of determined first-time buyers think the difficulties are ultimately worth it in order to get on the property ladder.
“It’s important that prospective buyers are aware of the support available to them. Would-be buyers should consider seeking advice from a broker who can lend a helping hand and guide you through the process of becoming a homeowner.”
**Ends**
1Research conducted, on behalf of Aldermore bank, by Opinium between 31 May -15 June 2022, with a nationally representative sample size of 2,000 Prospective First Time Buyers.
2 Using an average cost of £6 per dish
3Using the average UK Uber cost
4Using the average rent for a room in the UK
5Using average UK gym membership cost
6Using average Ryanair flight cost from their 2021 Annual Report, then converting Euros price to GBP
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