Deposits, not mortgage availability, holding back eager FTBs

New research, the first in a new quarterly series published today by Aldermore, the specialist lender and savings bank, shows that the number of prospective first-time buyers planning to get on the housing ladder has remained the same despite uncertainty following the EU referendum.

Related topics:  Mortgages
Amy Loddington
29th September 2016
first time buyer ftb buyer young couple house

The study, carried out by YouGov, explores how confident those currently looking to buy their first property feel, and what the biggest hurdles are when trying to get on the housing ladder. The First-Time Buyer Index, conducted both before and after the EU referendum, found similar levels of confidence from first-time buyers looking to purchase their first property in the next 12 months.
 
The research suggests around a million people who have never previously owned a property are planning on purchasing their first home in the coming year. 95% of first-time buyers say they are finding it difficult to get on the housing ladder, with almost four out of every 10 (39%) saying it is ‘extremely difficult’ - however, mortgage affordability did not appear to be the main issuem, with fewer than one in ten (7%) FTBs citing difficulties with securing a mortgage.

Raising a deposit was reported as the main obstacle FTBs face (39%) compared to the previous survey conducted, up from 36% - beating mortgage availability and house prices, and only 16% of FTBs plan to fund their deposit without any additional help.

 Commenting on the research, Charles Haresnape, Group Managing Director Mortgages at Aldermore, said:

“Our research, conducted both immediately before the EU referendum and after the initial period of uncertainty following the Brexit vote, shows that first-time buyers’ mindset remains almost entirely unchanged on their plans to purchase their first property. 

“First-time buyers are the driving force of the property market, and the levels of confidence and economic outlook have large-scale ramifications further up the housing chain. Tracking the changing attitudes of those looking to buy their first property is an important part in assessing how the market can be adapted to work in the best interests of all those looking to make their dream of owning their own home a reality.
 
“While around a million people are looking to get on the housing ladder in the next twelve months, trend data shows only around a third or so will actually achieve that goal, with the number of first-time buyers in the last two years in the region of 300,000. 
 
“A huge focus on securing a mortgage masks the issues that many have reported in raising the initial deposit, with a large proportion unable to do so without family help at a time of rising rental costs across the country, with three quarters of respondents considering the Help to Buy (HTB) scheme. While the HTB mortgage guarantee scheme is ending in December, Aldermore will continue to support the large demand from borrowers looking for higher LTVs through the equivalent Mortgage Indemnity Scheme. 
 
“While certain lenders offer options such as our Family Guarantee Mortgage, sluggish wage growth and the difficulty of funding a deposit are likely to be responsible for many of the two thirds who don’t manage to buy a property within a year.” 

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