Print friendly version 8 Apr 2008

Average age set to rise for first-time buyers

The average age of a first-time buyer, currently 34 years old, is likely to increase over the next two years thanks to lenders' increasing insistence on bigger deposits, according to Charcol.

The brokerage has predicted that recent developments in the mortgage market, whereby lenders have increased product rates and started to refuse to lend to borrowers with little or no deposit, mean many first-time buyers will be forced to wait it out for the next two years while they save a 10% deposit.

Katie Tucker, technical manager at Charcol, said: “The average loan-to-value (LTV) for first-time buyers increased slightly to 82%, as those buyers that could rushed for the last of low deposit mortgage deals. Next month’s figures should reflect the low maximum LTV mortgage deals left.

First-time buyers made up a small 7% of the mortgages arranged in March, compared to 9% in 2006 and 2007. Joint first-time buyers reached a one year high of 58%. Tucker explained: “The high cost of today’s mortgage rates, combined with the improved deposit-gathering power of a pair, leaves the first-time twosomes in a much stronger position than those buying alone.”

Another indicator of market issues was that the number of borrowers taking out a fixed rate in March reached 64%, from 52% in February, according to Charcol’s figures. Tucker added: “It is very rare, and a sign of the turmoil in the markets, that people would opt for fixed rates, when Bank Rate is so widely expected to be cut at least once more this year but borrowers have prioritised the security of an affordable fixed rate this time, over a high rate which has the potential of falling.”

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