The latest Money Statistics report, out today, has uncovered that despite an improving economic outlook, many young people are still left struggling to buy their first home.
Based on figures from the Council of Mortgage Lenders, the average deposit for a first-time buyer is £27,719. And with the average household saving 4.9% of their income it would take 22 years for someone on the average salary, saving the average amount per household every year in an instant access savings account, to afford the average first-time buyer deposit.
And the picture isn’t much better for those savvy enough to take advantage of the tax-free interest they get from an ISA. If someone on the average salary saved 4.9% of their income, the equivalent to just over £100 a month, in an average instant access savings account for a year, they would receive £4.69 in interest after tax. If they saved it in an average cash ISA, they would receive £10.63. Meaning it would still take them 21 years – reaching their goal a year earlier than in a standard savings account.
These findings paint a particularly bleak view of the prospects for young, first time buyers trying to get their feet on the property ladder. And goes further to explain the reasons behind the growing number of adults choosing to still live with their parents, and the disillusionment felt amongst a generation hoping to own their first home without needing to rely on the help of their parents or family members.
Michelle Highman, Chief Executive of The Money Charity comments:
“This particular statistic published in our new Money Statistics makes for very grim reading, and there is certainly no denying things are tough for first-time buyers; not only are most young, hardworking people struggling to save the large sums of money needed for a deposit, but new rules mean they will also face stricter checks before being granted a mortgage."
