First-time buyers now delaying house purchases

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Michael Brown

Content Writer
Published: 04/05/2022

Nationwide’s study found 28% of respondents believed financing a deposit to be the biggest obstacle to homeownership.

Seven in ten potential first-time buyers, who were looking to purchase their property in the next 12 to 24 months, will now delay their plans due to the growing cost of living.

This is according to research released by Nationwide BS today, which surveyed more than 2,000 people who are looking to buy their first home within the next five years.

In addition to this, 28% of the survey’s respondents felt that saving for a deposit was the biggest obstacle to owning a home. In comparison, concerns over borrowing enough and keeping up with mortgage payments was the next biggest challenge for potential homeowners.

“Building a deposit remains the single biggest barrier to homeownership today, with many people starting out facing a long uphill battle to save. The rising cost of living has made this even harder,” said Paul Archer, Senior Mortgage Manager at Nationwide Building Society.

Building a deposit

In an article published in March, Esther Djikstra, Mortgages Director at Halifax, said the average deposit for a 95% loan-to-value mortgage stood at £12,500. 

With this in mind, Nationwide BS’s research found that of those surveyed, the average first-time buyer had saved £14,700 for their deposit. This comprised an average of £17,028 for men and £13,394 for women.

To get to this figure, the average first-time buyer would have to start saving three to three and a half years before buying.

However, in order to combat the cost of living crisis, 38% of Nationwide BS’s survey respondents planned on using the money they had already saved for a deposit to pay their bills.

A larger 48% of respondents, on the other hand, planned on reducing the amount they would save for their deposit.

What mortgage rates can first-time buyers expect?

Potential first-time buyers will also need to note the increase in mortgage rates from the beginning of the year, according to our data.

In the graph below, we have highlighted the average mortgage rates for two and five-year fixed rates at both a 90% and 95% loan-to-value ratio.

First time buyer average mortgage rates

Average rates, which are often preferred by first time buyers, are on the up according to our data.

This month, the average rates for two-year and five-year fixed mortgages at both a 90% and 95% loan-to-value ratio have exceeded their same average figures as of the beginning of the year.

Moreover, the average rate for five-year fixed term at a loan-to-value ratio of 95% was the only one of these figures not to exceed the same average in May 2019, one year before the onset of the pandemic.

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