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Jump in first-time buyers using savings to purchase

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Written by: John Fitzsimons
24/01/2020
The English Housing Survey from the Office for National Statistics provides an important measure of the market today
Jump in first-time buyers using savings to purchase

Last year saw a significant jump in the number of first-time buyers tapping into their savings in order to purchase their first home, according to the latest English Housing Survey.

The proportion of first-time buyers using savings to help fund a purchase rose from 76 per cent in 2017-18 to 85 per cent in 2018-19.

Around 45 per cent of first-time buyers took out a mortgage with a repayment term of more than 30 years, while 49 per cent had a deal running for between 20 and 29 years, which the survey found was “consistent” with last year.

More than two thirds paid a deposit of less than 20 per cent of the purchase price, while a third reported receiving help from family or friends, with six per cent using inheritance as a source of deposit.

The report found that the number of first-time buyers dropped last year, from 785,000 to 727,000, while the average age of first-time buyers was unchanged from the year before at 33, rising to 37 in London.

Unchanged affordability

People buying a home in England with a mortgage are devoting around 18 per cent of their household income towards repayments, the survey reported.

This is compared to 33 per cent of income for private renters and 27 per cent for social renters.
For both mortgage holders and social renters this figure has not changed since 2010-11, while for private tenants it has dropped two percentage points.

Mortgage holders trailing outright owners

The survey also revealed that the proportion of homeowners with a mortgage continues to be lower than those who own outright, continuing a trend that started in 2013-14. In 2018-19 the survey found that 34 per cent of homes were owned outright, while just 29 per cent were owned with a mortgage.

The report said this increase is at least partly explained by the ageing population, with large numbers of baby boomers reaching retirement age, paying off their loans and moving into outright ownership.

Growing proportion of younger buyers

The proportion of people aged 25-34 in owner occupation is now level with the number in the private rented sector.

The English Housing Survey noted that the proportion in owner occupation crashed between 2003-04 and 2013-14 from 59 per cent to just 36 per cent. Since then it has steadily increased to its current level of 41 per cent.

This is the same proportion of this age group in the private rented sector, which has dropped from a peak of 48 per cent in 2013-14.

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