Solo first-time buyers need to raise double deposit of 10 years ago

A first-time buyer purchasing a typical home solo would need to raise a deposit of almost £75,000 – double that of a decade ago, it has been claimed.

Property website Rightmove said that a typical first-time buyer buying on their own needs to provide £74,402 as a deposit in order to get a mortgage with a typical lender.

The figure was based on a single buyer on the median wage being able to borrow a maximum of 4.5 times their salary to buy the average first-time buyer home, costing £223,117.

The wage figures used were from the Office for National Statistics and are £31,980 today compared to £23,764 ten years ago.

A typical first-time buyer needs an average deposit of £74,402, says Rightmove

The size of the deposit they would need to this has increased 112 per cent compared to ten years ago, driven up by house prices rising faster than wages.

The financial pressure eases significantly for first-time buyers who are looking to get onto the property ladder as partners.

For two people buying together, who could therefore use two salaries to extend mortgage borrowing, the required deposit size based on the same criteria has increased by 56 per cent, from £14,269 to £22,312.

For a person looking to buy on their own, on the national average full-time salary, borrowing 4.5 times their income, ten years ago they would have needed to find a 25 per cent deposit of £35,053 to bridge the gap between their mortgage and the price of a typical first-time buyer home.

Today they would need a 34 per cent deposit of £74,402 to do the same thing.

The figures were produced as Boris Johnson announced a review into the mortgage market aimed at increasing access to 95 per cent loans for properties.

The Prime Minister’s official spokesman said: ‘We want to look at access to low-deposit mortgages and what our mortgage industry can learn from others around the world.’

He said the review into ways to ‘extend low-deposit mortgages and create a greater market for them’ will start in the coming weeks and report back in the autumn.

Rightmove said that the currently monthly mortgage payment for someone with a 10% deposit is £901

Rightmove said that the currently monthly mortgage payment for someone with a 10% deposit is £901

Rightmove said that the current average asking price of a first-time buyer home is £223,117, which is 56 per cent higher than 10 years ago.

If someone was buying on their own and could only afford to save £100 a month towards a deposit, it would take them 62 years to save the £74,000 they need, according to Rightmove.

Two people buying together should be able to get a mortgage with a 10 per cent deposit, which would be £22,312. If they only had to save for a 5 per cent deposit they would need to raise £11,156.

Tim Bannister, of Rightmove, said: ‘The next generation of first-time buyers currently need to raise a deposit that is more than 50 per cent higher than ten years ago, while average salaries have only increased by 35 per cent.

The challenge for first-time buyers of raising a deposit is not going to get easier

‘That’s before you factor in if you’ll be able to get a mortgage, as right now if you’re buying on your own you’d need a hefty deposit of more than 30 per cent to be able to borrow enough to buy a typical first-time buyer home.

‘If a review of the mortgage market could help with the challenge of needing such a big deposit then it would be greatly welcomed by those who are able to demonstrate that they can afford monthly payments, but who are currently locked out of home-ownership.

‘It’s clear to see why there are many renters keen to get on the ladder, as they’re forking out 40 per cent more each month than ten years ago, while low interest rates means average mortgage payments have only increased by 11 per cent over that same time.

‘Although competition among buyers is now starting to ease, we’re still in a market where demand is massively outstripping supply in many areas of the UK.

‘This has already pushed prices to record highs so the challenge for first-time buyers of raising a deposit is not going to get easier.

‘The review will take time and so any solution won’t help in the short-term, so as the cost of living increases more people are likely to look further afield at cheaper areas to get on the ladder.’

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