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FTBs more reliant on family loans as deposits soar
First-time buyers are increasingly seeking help from family to afford soaring deposits that commonly reach half their annual income.
According to research from Santander, one in three first-time buyers expects to ask for a family loan to help purchase their first property – almost three times as many as current home owners, who asked for financial help from their families.
The study also found that on average first-time buyers expected their deposit would be 32% of their annual salary, but 19% predicted it would consume half their income.
In comparison, current homeowners estimated that when they bought their first home, their deposit was an average of 20% of their yearly income, with only 5% spending more than half their salary on a deposit.
Despite the extra help from family members, first-time buyers expect to spend an average of five years saving for a deposit – a whole year longer than those who bought their first property five years ago.
Current first-time buyers blamed increased living costs cutting their potential saving power.
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The research questioned 2,004 UK adults of which 395 said they were looking to buy their first property.
It revealed a sizeable gender imbalance when regarding deposits as almost a quarter (23%) of women expected to spend more than half of their annual salary on their deposit.
However, this fell to just 14% of men.
Loans from grandparents were increasingly one source of capital for first-time buyers, growing from 2% five years ago to 8% of present buyers.
However, despite these struggles new buyers were perhaps surprisingly upbeat as 45% were more positive now than a year ago, while 20% said their confidence had declined.
The research also found that the health of the UK economy had little effect on those planning to buy.
A sizeable minority (44%) said while they were concerned, they would go ahead with their purchase regardless of the wider economy, and 39% added that economic factors would not affect their decision to buy at all.
Santander UK managing director of mortgages Miguel Sard (pictured) said first-time buyers were using alternative income streams over and above their salary.
“Today’s first-time buyers are demonstrating resilience and determination to achieve their home ownership goals,” he said.
“The purchase of a first property still remains high on the priority list for many people across the UK and it’s encouraging to see so many first-time buyers feeling positive about the year ahead.”