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First-time buyers aiming high

First-time buyers aiming high

Category: Mortgages

Updated: 19/02/2014
First Published: 18/02/2014

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

With more first-time buyers (FTBs) able to get onto the property ladder, largely thanks to the Help to Buy scheme encouraging more banks to offer 95% mortgages, the market is booming. It seems those prospective homeowners have increasingly expensive tastes too – according to research from Clydesdale and Yorkshire Banks, a three-bedroom home tops the wishlist for the majority of FTBs.

Almost a third (32%) of respondents to the Annual First Time Buyer Survey would choose this style of property as their starter home, a significant majority, with the next highest percentage (24%) saying that they'd prefer a two-bedroom flat.

A two-bedroom house was next on the list for 22% of first-time buyers with 10% hoping for a three-bedroom flat instead, with relatively few aiming for a one-bedroom flat or house (just 7% and 3% respectively).

It just shows how high a lot of FTB aspirations are, perhaps not surprising when many have had to save for a deposit for a considerable amount of time – 59% of those surveyed had to rent before buying, putting increased pressure on their savings prospects, while 23% lived with parents or relatives.

It also indicates improved confidence in the sector. Arguably, this has been fuelled by the vastly improved property market, increased availability of high loan-to-value mortgages and reduced affordability concerns, but this boost in FTB confidence comes amid ever-rising house prices.

There have been two house price reports emerging in as many days, with yesterday's Rightmove House Price Index putting the average UK home at £251,964 and similar figures from the Office for National Statistics (ONS) showing annual house price growth of 5.5%, putting the average property at £250,000.

This means a lot more buyers could find themselves in the 3% stamp duty bracket, and could also mean the average UK home is out of the price range of a lot of FTBs. Figures from the ONS even show that prices paid by FTBs were 7.4% higher than a year ago, but that hasn't dampened aspirations.

It all points to first-time buyers needing to make sure they've got a suitable deposit to get their foot on the ladder, particularly with prices rising – and even more so as they've got increasingly high expectations.

Putting enough money aside to build a comfortable deposit should be at the top of the agenda, with 5% being the minimum level. It means careful budgeting is a must, but it also means it's important to decide what type of house you're looking for – and therefore what price range you're aiming at – to ensure you save a sufficient amount.

Then, of course, it all comes down to finding the right mortgage to ensure repayments are affordable. Luckily there are a lot of providers around that will offer 95% mortgages, helping first-time buyers realise their dream of homeownership – no matter how high their aspirations may be.

What Next?

Compare mortgage rates to find the best deal

Kick-start your deposit fund with our pick of the best savings accounts

Find out more about Help to Buy

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

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