Half of first time buyers take over five years to save enough for a deposit

£5 billion’s worth of savings burning a hole in first-time buyers’ pockets

Laura Bond
Authored by Laura Bond
Posted: Monday, November 16, 2020 - 14:15

The fact that first time buyers are finding it hard to navigate the property market at the moment is not ‘new news’, however the amount of money that’s held up most certainly is. It's estimated that their difficulty to enter the market is putting £5billion1 worth of property deposits in limbo, which is not only considerably slowing the market but potentially stalling its recovery as well. Looking at everything from mortgage limitations to deposit requirements, online mortgage broker, Trussle, is working hard to ensure that FTBs have the best available tools to navigate the property market.

A survey of 2,000 first time buyers in the UK has shown that over half of first time buyers take over five years to save enough for a deposit[5]. With 72%[6] of first time buyers in a position to look for a home within the next two years, it’s no surprise that 44%[7] of respondents feel confused by the constantly changing deposit requirements and lender criteria.

The pandemic is continuing to impact every aspect of life, and home buying is certainly not immune. 76%4 of first time buyers feel worried, confused and angered at how COVID-19 has affected their home ownership aspirations. 65%[8] of first time buyers feel it’s ‘impossible’ to get on the property market and over half (62%)[9] of first time buyers admit defeat and have opted to save for another year or more.

However, the feeling is not the same in every area of the country, with first time buyers in the North East finding it easier to get on the property ladder than those in the South. While this is likely due to lower house prices, it’s worth remembering that cost of living  also varies regionally[10]. To put this into context, 71% of Liverpool’s first time buyers have managed to save enough for a deposit without help from their family or loved ones, whereas 42% of Bristol’s first time buyers have had to rely on the Bank of Mum and Dad.[11]

With enquiries for rural village properties skyrocketing 126%[12], a move further out could be an option to get the collective £5billion1 out of pockets and into action. However, with 44%3 of first time buyers admitting to being confused by their options, it’s likely that first time buyers are struggling to quantify how much they need to save to afford a home further afield.

To help first time buyers understand deposit requirements across the UK, Trussle has created a deposit map that can be used to  see what options may be available for the deposit they’ve managed to save.

It’s also important for first time buyers to remember that the Stamp Duty holiday will be coming to an end on 31st March 2021. While it has been widely reported that the last day for making the deadline was 31st October[13], using a digital mortgage broker has been proven to get mortgages over the line faster than a traditional broker. The average wait time for buyers from mortgage application to property completion is 162 days[14], but wait times with Trussle are currently between 96-166[15] days, depending on location. Trussle has created a graph which estimates how long it’ll take you to complete on a home, depending on the area you’re buying in.

Miles Robinson, Head of Mortgages at Trussle comments: “While it’s encouraging to see the property market remaining open for business with viewings and valuations remaining in place during the second lockdown, it’s disappointing that first time buyers are struggling to navigate the market.

One option for first time buyers is to adapt expectations when it comes to location, exploring more affordable areas and seeing the working from home option as a long term alternative. However, the onus cannot continue to sit purely on the first time buyer and their transactional power cannot remain untapped as we head into an uncertain 2021.

The financial impact of the pandemic has meant that lenders are pulling a number of high LTV mortgages. As of this week, there are only 74 mortgage deals available for mortgage applicants with a LTV over 90%. By comparison, this time last year there were over 2,000.[16]

While lenders are right to be cautious given the  economic climate, any sustainable recovery for the property market will need to see activity amongst first time buyers. And, the demand is there. At Trussle, we’ve seen enquiries from first time buyers grow by approximately 230% compared to this time last year[17].

We’d like to see lenders beginning to reintroduce higher LTV products that will help first time buyers. In the meantime, we hope this map will help first time buyers to quantify the areas worth considering.”