First-time buyer deposits falls to £24,637
According to the latest First-Time Buyer Tracker from Your Move and Reeds Rains the average first-time buyer deposit fell by £2,700 in the year to May to £24,637. This represents 67% of a first-time buyer’s annual income, down from 77% 12 months ago.
The average property purchased by a first-time buyer cost £146,887, £9,000 more expensive than in May 2013.
David Newnes, director of Your Move and Reeds Rains, attributed the fall in deposit amounts to the government’s Help to Buy scheme.
“Savings rates have been stuck at rock bottom for over five years, wages are only just beginning to show signs of growth and the cost of living has been mounting all the while.
“Without Help to Buy, these stumbling blocks may have been too large for some prospective homeowners to overcome.”
The average loan-to-value of a first-time buyer was down 0.4 percentage points from April to 83.2% while mortgage rates had increased from 3.99% in April to 4.09% in May.
First-time buyer sales fell 4.5% as tougher lending criteria brought in with the Mortgage Market Review (MMR) began to bite, according to the report. House purchase approvals fell for the fourth consecutive month in May.
Newnes said the slowdown is most likely a temporary blip but there may be some more permanent side-effects now that Mak Carney has exercised his new powers over loan-to-income ratios.
He said: “MMR encourages the individual investigation of each application but loan-to-income caps are far more simplistic and could lead to a number of worthy first-time buyers missing out on a mortgage.”