Young homeowners on the rise

A Government report has revealed that the number of 25-34 year olds getting onto the property ladder has been on the rise since 2014.

Statistics released in the English Housing Survey show that the number of homeowners aged 25-34 has risen from 36% in 2013-14 to 41% in 2018-19. Meanwhile, the proportion of 25-34 year olds renting has fallen from its peak of 48% in 2013-14 to 41% in 2018-19.

Despite the increase in young homeowners, a report by Halifax released today shows that first-time buyer costs are rising. According to the report, the average price paid by first-time buyers in the UK last year was £231,455, which is up by 9% year-on-year. In addition to this, the average deposit put down by a first-time buyer in 2019 was £46,187, an increase of 7% year-on-year.

Commenting on the statistics, Russell Galley, managing director at Halifax, said: “Whilst price growth in the overall housing market has been modest in recent years, the level of inflation facing first-time buyers is greater, which compounds the challenge in raising bigger deposits.

“However, given their importance to the market as a whole, it’s reassuring that the overall number of new buyers getting on the ladder remains stable.

“This is in part is explained by initiatives designed specifically to support this key group, including Help to Buy schemes and family support mortgages, and they also benefit from the continued period of record low interest rates. However, it’s clear that more needs to be done to address more fundamental long-term issues, not least the shortage of new, affordable homes being built.”

Despite the rise in house prices for first-time buyers, research carried out by Moneyfacts.co.uk has found that average mortgage rates have been falling since 2013. In January 2013 the average two year fixed mortgage rate on a 95% loan-to-value was 5.86%, while today it stands at 3.23%. Average 95% LTV five year fixed mortgage rates have also fallen, decreasing from 5.64% in January 2013 to 3.53% today.

Rachel Springall, finance expert at Moneyfacts.co.uk, said: “It can be an uphill struggle for first-time buyers to amass a large enough deposit to get on the property ladder, so any growth in the choice of deals to surface for those who can raise a 5% deposit would be welcomed. Clearly as the availability of deals improves this can mean a rise in the number of younger borrowers achieving their dreams of homeownership.

“There are an abundance of mortgage deals out there for first-time buyers to choose from, but it is vital they work out the overall true cost of any deal before they commit. Seeking independent advice from a mortgage broker can help them navigate the mortgage maze in this instance.”