First-time buyer deposits are on the rise with the average amount being saved to get onto the property ladder rising to nearly £31,000.
Figures released by Experian revealed people buying their first property were saving 12% more over the course of 2018 to put down as a deposit.
Indeed, back in January 2018 the typical amount being saved by UK first-time buyers was £27,768. But this amount had soared by January 2019 to £30,989, highlighting the extent of the challenge faced by potential homeowners.
Experian said previous research had revealed more than a fifth of homebuyers had admitted securing a deposit was the biggest hurdle they faced when trying to buy their home.
More than a quarter said they relied on financial help from their family to gather enough money, receiving on average £7,637 from the so-called Bank of Mum and Dad.
Credit score
The report also revealed the impact of first-time buyers’ credit scores. The analysis showed a quarter of those searching for mortgages had an Experian credit score of ‘Excellent’.
This meant, said Experian, the majority of potential homeowners were putting themselves at risk of being rejected for the best deals when they applied for a mortgage. Indeed, 13% of people were scored as ‘very poor’ and 17% as ‘poor’ – these customers would be unlikely to be accepted for a mortgage.
Amir Goshtai, managing director of Experian Marketplace and Affinity, said: “It’s understandable that gathering enough money for a deposit can seem overwhelming for first-time buyers when you see how much they have to save, while many are reliant on some sort of support from their family to help boost their coffers.”
Fixed-rate mortgages
Experian’s report also revealed the types of mortgages people were looking at. It found three quarters of people were looking for fixed-rate mortgages in April.
Goshtai added: “When people can buy, most are looking at the security of a fixed-rate deal, giving them the assurance of the same monthly payments over the length of the mortgage.
“However, searches for fixed-term mortgages did reduce slightly, which may have been the result of consumers anticipating a resolution to Brexit discussions and greater certainty in the economy.”
Article my Kate Saines for www.whatmortgage.co.uk