A financial provider has revealed it could take tenants more than 20 years, to save the money required to put down as a deposit on their first house.
Scottish Widows, who conducted the survey, discovered the average renter will save around £2,000 a year towards a house deposit. This means that it could take a whopping 23 years, to save the average £50,000, required to make the down payment on their first house.
The survey, which involved more than 5,000 adult renters, revealed some surprising statistics, for example, only 29% of the participants admitted they still have intentions of owning their own home.
Amazingly just over 1,600 people, around a third of those surveyed, said they were not interested in saving at all. Experts suggest this could be due to a number of factors, including increases in the cost of living and a lack of disposable income.
Rather surprisingly, a minority of respondents revealed that should their work or employment come to an end, their savings would last no longer than a month. This clearly generates further problem, potentially leaving essential bills unpaid, causing debt to mount up and potentially harming the credit status of would-be homeowners, which will in turn affect the chance of a mortgage application being accepted.
Iain McGowan, Head of Savings and Investments at Scottish Widows, stated this: “What is most worrying is that over a third of renters have no savings at all.”
Iain continued: “Whilst owning a property is seen for many as something to work towards, we need to ensure that people are able to manage their out-goings, whether rent or a mortgage, and create that safety-net for unexpected bumps in the road.”
Since the credit crunch and subsequent financial crisis, it has been harder for first time buyers to get a mortgage, with credit criteria tightening and lenders demanding ever larger deposits from borrowers.
Furthermore, saving for a deposit has been made harder due to rising inflation and high rental costs, whilst wages have remained stagnant.
The government has launched various schemes to help both first time buyers and existing homeowners looking to move. The most recent of these was the Help to Buy scheme, announced in last month’s Budget and comes on the back of the Funding for Lending Scheme (FLS), which has helped to push down interest rates, although the effect it has had on making mortgages more available is debatable.
Mortgage lenders themselves have also followed the government’s lead, with initiatives such as Lloyds’ Lend a Hand scheme and Barclays’ Family Springboard Mortgage.