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First-time buyer deposits escalate 41 per cent in a decade

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  • 17/08/2022
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First-time buyers need around £10,000 more for a deposit than they did a decade ago due to soaring house prices and earnings not keeping pace.

According to analysis by Barrows and Forrester, which is based on 15 per cent mortgage deposit for average first-time buyer house, the average cost of a first home in 2022 stands at £231,917 and the average deposit is set at £34,787.

This compares to the average house price in 2012 of £141,572 and a 15 per cent mortgage deposit of £21,236, or £24,660 adjusting for inflation.

From a regional perspective, the East of England has seen the biggest change, with first-time buyer deposits rising by 51 per cent o £42,538.

This was followed by London and East Midlands, where first-time buyer deposits grew by 47 per cent over the period to £67,800 and £29,902 respectively.

The lowest growth was in North East at 12 per cent, with average first-time buyer deposit coming to £19,565, Scotland at 25 per cent and Yorkshire and the Humber at 32 per cent. Average first-time buyer deposits in both areas come to £22,073and £25,531 respectively.

James Forrester, managing director of Barrows and Forrester, said: “The outlook is currently a very bleak one for those yet to secure that first foot on the property ladder. House prices have soared over the last 10 years, let alone during the pandemic, and so the initial financial hurdle of a mortgage deposit is far, far higher than it was in 2012.

“At the same time, earnings have failed to keep pace, with a sustained period of record low interest rates also making the task of saving a deposit extremely difficult.”

He added that savings may accumulate more due to higher interest rates as the base rate has gone up, but on the flip side the cost of securing and repaying a mortgage was also increasing considerably.

Forrester said those able to make it onto the first rung of the property ladder would find their household income stretched even further as mortgage costs rose.

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