First Time Buyers deposit gap could now be at £15,500

Average first time buyer saving towards a mortgage deposit of nearly £23,000*

• Deposit gap adds more than £1,200* onto yearly mortgage bill
• One in fifteen currently looking to buy has been turned down by a mortgage lender

unbiased.co.uk’s latest Advice Drivers*** report shows demand for first time buying advice at record level

New research from unbiased.co.uk, the professional advice website, reveals that first time buyers looking to secure a 75% LTV mortgage on an average first-time buyer property would now be facing a deposit gap of around £15,500. The data shows the average first time buyer is saving towards a deposit of £22,706, which (with a little bit more) would allow them to access a maximum mortgage of 85% LTV on the average first time buyer house price**.

Mortgage Reality

The Department for Communities and Government’s latest figures show the average first-time buyer property cost just over £153,000. Based on the current average deposit first time buyers are saving towards, this allows them access to a maximum of an 85% LTV mortgage. Best buy tables show the most competitive 85% LTV they can access is 3.34 per cent** for a two year fixed rate (repayment mortgage) which would mean a monthly repayment of around £640.

If first time buyers were to increase the amount they are saving towards by £15,500 this would give them access to a far wider range of mortgages, including 75% LTV deals. Current best buy tables show two year fixed rates available on 75% LTV deals from 2.89%**. On a capital repayment mortgage this would mean a monthly bill of £536 and an overall monthly saving of at least £100; that’s £1,200 a year. 

The data also showed that of those looking to buy, one in fifteen (6%) admitted that they had already been turned down by a mortgage lender. 

More and more first time buyers are now looking for professional advice to get them onto the ladder; unbiased.co.uk’s ‘find a mortgage adviser’ search shows enquiries for first time buyer advice from a whole of market mortgage adviser have reached record levels, accounting for on average nearly one in four (38%) mortgage searches over the past year alone.

Karen Barrett, Chief Executive of unbiased.co.uk, comments: "Our latest research highlights the gap between the amount first time buyers are able to save up and what is needed to access the most competitive rates in the market. While saving towards that initial deposit is no easy feat in the current economic climate, the figures show that if first time buyers’ aim towards a larger deposit they could save significantly on their yearly repayments. Long gone are the days of 100% LTV mortgages and £10,000 deposits. Stricter lending criteria have also meant that many first time buyers aren’t even making it past the application stage.

“A whole of market mortgage adviser will be able to clearly explain your options and look at all the mortgage deals available to you in the market. They will be able to advise you based on your current financial situation and future plans, ensuring that you get the best deal and most affordable monthly repayments possible.

“Consumers looking to find a whole of market mortgage adviser can carry out a free and confidential search at www.unbiased.co.uk.  A whole of market mortgage adviser can give specialist advice on mortgage products from across the whole of the market, rather than just a selection of providers.”

ENDS

Research based on Opinium Research results, 2010 online interviews, from 21st February – 23rd February 2012 (nationally representative).

*Figures based on average deposit saved; calculated using Department for Communities and Government December UK House Price Index Report: https://www.gov.uk/government/collections/uk-house-price-index-reports. All figures rounded to the nearest £0,000 and calculated based on a capital repayment mortgage (not interest).

** LTVs based on 2 year fixed rate best buy table accessed at the time – 16 March http://www.bestmortgagesforyou.co.uk/bestbuy/ 

*** Figures taken from unbiased.co.uk’s February Advice Driver report. Consumers can tick multiple product areas when searching for a whole of market mortgage adviser the total percentage of all figures add up to more than 100%.

For more information contact:

Lisa Grando/ Emily Falla/ Maddy Morgan Williams, Lansons Communications:  020 7294 3682

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About unbiased.co.uk, the professional advice website

The unbiased.co.uk portal is a free and confidential UK-wide search matching consumers with local professional advisers: ‘find an IFA’, ‘find a mortgage adviser’, ‘find a solicitor’, and ‘find an accountant’. These searches enable consumers to find professional advisers by postcode, area of specialism, qualification and payment method. In 2011, unbiased.co.uk fulfilled around 450,000 searches for local, professional advice. 

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