According to Mortgage Solutions’ latest poll, which asked whether first-time buyers are taking an early Christmas break from house hunting or are they simply armed with a bigger deposit, 33 per cent of brokers said the number of first-time buyers had declined in recent months.
Around 28 per cent said that there were see more first-time buyers with a gifted deposit from family, and nearly 23 per cent said that they were seeing first-time buyers saving for a deposit of 10 per cent or more.
Nearly 16 per cent said that they hadn’t seen a change in first-time buyer mortgage behaviour.
Miles Robinson, head of mortgages at online mortgage broker Trussle, said that following the end of the stamp duty holiday it had seen a decline in first-time buyer leads, but in the past few months it had seen the trend start to reverse.
He suggested that this could suggest that there could be a “resurgence of the first-time buyer market”.
He added that Trussle data, showed that the average deposit size for first-time buyers in November was above £30,000, which is 50 per cent higher than the average deposit size in January. He said this showed there was an uptick in deposit amounts along with first-time buyer aspirations.
Recent figures from Nationwide showed that first-time buyers wanting to put down a 20 per cent deposit to get on the property ladder needed to save 110 per cent gross earnings of the average full-time employee.
This is a record high, up from 102 per cent around a year ago.
Aldermore’s first-time buyer index from last month also showed that 58 per cent of first-time buyers needed to raise a larger deposit, with the average deposit now set at £22,849.
John Phillips, national operations director at Just Mortgages, said: “We’ve seen the number of first-time buyers has declined slightly, but not for any other reason than the usual seasonal decline. As we approach Christmas people look to put plans to move on the backburner, and the statistics suggest this is happening in 2021.
“With the end of the stamp duty holiday, the urgency has gone from the market and people are settling in for a quieter Christmas after what has been a tumultuous year.”
Larger deposits needed and gifted deposits more common
A Habito spokesperson added that it had seen a reduction in the number of first-time buyers as a percentage of overall business and added that first-time buyer deposits were getting larger which could mean gifted deposits became more common.
The spokesperson said: “Gifted deposits have been a common deposit source for first-time buyers for many years, largely linked to the price of rent and property prices which means it’s very difficult to save.
“Of course, we’ve seen in property value in the last year jump up at a rate much, much higher than any salary increases putting a higher burden on first-time buyer to get an ever larger deposit together.”
She added that on the product availability side, there were options at 95 per cent loan to value (LTV) from high street lenders but an applicant’s credit history needed to be “spotless”.
She noted that there was a higher rate difference between 90 per cent LTV and 95 per cent LTV, and that this was only recently coming back down to pre-pandemic levels.
She said: “It’s really hard to say what next year will hold. Higher deposit mortgage prices are coming down which should be better news for first-time buyers, but there’s huge uncertainty over the impact Omicron might have on the economy or how long the uncertainty over this wave could last.”
Robinson added that with rates where they were currently it was “no surprise” family members were keen to get loved ones on to the property ladder.
He added that research from Zoopla showed that 64 per cent parents had helped children buy their first home and 24 per cent of parents said their children would not have been able to afford a property on their own.
Phillips said: “Confidence in the market hasn’t changed from six months ago, and the increase in gifted deposits may be as a result of increasing prices. With wages being outstripped by house prices in the last year, it’s understandable if more borrowers need a helping hand onto the ladder.”
