First-time buyers are increasingly using personal loans as house deposits, according to Yorkshire Bank’s latest housebuyer survey.
Andrew Hindle, head of personal lending at Yorkshire Bank, said: ‘First-time buyers are often borrowing the maximum amount they can and cannot go that bit further. Worryingly, 7% of potential first-time buyers are considering taking out a personal loan to help them scrape together a deposit, this is something we would not recommend.’
The survey of 2,000 people also found confidence remains high even though there are signs of a property slowdown, .
‘Despite cautionary words, from many in the industry, unfailing housebuyer confidence is maintaining the housing markets buoyancy.
‘Mortgage payments are currently taking up a much smaller proportion of peoples’ incomes than ever before,’ added Hindle.
Although 70% of participants predicted an increase in interest rates, only 10% said they felt discouraged by this, instead citing it as a ‘temporary inconvenience’. Around 17% of participants said they are confident the price of their house will increase significantly over the next 12 months.
The survey also found that there had been a swing towards flexible mortgages. ‘Housebuyers are reassessing their needs ‘ while confident about the property market, an unstable economic climate has them looking for more financial flexibility. Now, more than 27% are looking for the advantages of a flexible mortgage,’ said Hindle.
