First-time buyers face a savings time bomb and will soon be unable to borrow enough for their first home, according to internet lender Egg.
The average deposit for a new homeowner is estimated to rise by 6.8%, year on year, over the next decade to reach £32,000 in 2011. This is 78% of the average £41,000 a year income a first-time buyer could expect to earn. As a result, the average age of a first-time buyer is predicted to rise to 36.
According to the Saving To Get A Foot On The Property Ladder report, young people are struggling to find an average deposit of £18,033 ‘ 71% of today’s average £25,357 income.
Andy Deller, head of banking and insurance at Egg, said: ‘Today’s first-time buyers may be struggling to buy their new home, but the outlook is even worse for the next generation.
‘Rising house prices, com-bined with young people’s inability to borrow significantly more, will lead to soaring deposit levels, making it even harder to get a foot onto the property ladder.’
Only 32% of the 1,000 18-25-year-olds questioned have started to save for their deposit, saving an average £164 a month.
Egg also warned that homeowners will continually be playing ‘catch up.’
By 2011, only £21,000 would be saved, still £11,000 short of the predicted £32,000 deposit needed.