A survey by the Post Office has found that 53% of potential first time buyers believe that they will never be able to afford to buy a home.
A similar number thought that to save enough money for the deposit currently required by lenders they would need to receive an unexpected lump sum of money or get a better paid job.
Since the credit crunch banks and building societies have tightened their lending criteria and increased the size of deposit needed by first time buyers, with the most competitive deals given to buyers with the largest deposits.
First time buyer average age
The average age of a first time buyer has increased significantly over recent years and is now 35, compared to just 23 in the 1960’s.
The Post Office have blamed this increase on the stricter lending criteria imposed by mortgage lenders and the larger deposits needed just to be considered for a mortgage deal.
As always with housing the national picture can mask regional differences, for example the Post Office research found that home buyers in London, perhaps unsurprisingly given the high price of property in the capital, were hardest hit by the need for larger deposits. 43% of Londoners believe that they would not be able to afford a house deposit unless their financial circumstances changed.
The national average was lower at 37%, with 32% of people living in the West Midlands giving lack of a deposit as their main reason for not being able to buy a property. However, people in the region seem to be harder hit when it came to mortgage repayments with 32% saying that unaffordable mortgage payments were the main issue, only 12% of people in London gave this reason.
Experts recommend that prospective first time buyers set saving for a deposit as their key financial priority. Ideally 15% – 20% of the purchase price should be saved, although there are a small number of deals for those first time buyers with just a 10% deposit.
Larger deposits will mean a wider choice of mortgage deals are available and will be looked on more favourably by potential lenders.
Prospective first time buyers can also do other things to increase the chances of their application being accepted. For example having a stable address history and being registered on the electoral role will help, as will making loan repayments on time and having a stable employment history.