Despite Government efforts to encourage them into the housing market with shared equity schemes which require little or no deposit, two thirds of first time buyers believe that a lack of sufficient mortgage deposit is preventing them from owning their own home. A survey of 3,000 potential first time buyers by Miller Homes found that 28% of buyers still believe that they will need to save for at least five years before finally getting the keys to their own home.
The study also revealed that the average first-time buyer has spent a year-and-a-half saving £3,863 towards their deposit, but think they need nearer £13,490 before they will be able to buy a home.
One in ten respondents have been saving for five years or more and still do not have enough deposit, whilst more than 30% have no savings to put towards a deposit at all. More than 20% felt they would need more than £10,000 for a deposit whilst a quarter of all respondents said they would ask for help from a relative in order to raise the cash.
Sue Warwick of Miller Homes commented: “These results show that deposit concerns continue to keep many first time buyers out of the housing market, despite Government and house-builder shared equity schemes which aim to help people onto the housing ladder with little or no deposit. Whilst many first time buyers have been helped by these schemes, it is clear that the message is not getting through to all.”
The survey also found that 48% of first time buyers were concerned about reports of lenders becoming more stringent in their lending requirements. However, 70% also responded that they have not given up on the dream of owning their own home and a further 70% refuse to resort to desperate lending or credit to finance their mortgage deposit.
First time buyer deposit
Sue Warwick commented: “It is heartening to see that first time buyers are not giving up the dream of owning their own home and are not willing to resort to credit to finance a deposit. Whilst loan to values have become much tighter, the reality is that there has never been a better time for first time buyers to get onto the housing ladder. Prices are significantly lower and there is help out there in the form of shared equity deals which offer first time buyers 100% ownership of their home from day one. These measures mean that homes are more affordable to first time buyers than they have been in a long time.”
The survey results suggest that the shared equity concept is gaining support amongst first time buyers with 49% saying they understood and approved of the concept. 29% of respondents preferred a Government-run scheme, such as Home Buy Direct, compared to 17% preferring a housebuilder scheme; 53% expressed no preference. When asked if they would consider a shared equity to help get them onto the property ladder, 41% said they would consider such a scheme.
Sue Warwick commented: “These results demonstrate that the shared equity concept has gained momentum amongst first time buyers. I would urge potential first time buyers to look into the options of shared equity while there is still time. There are real opportunities for people to get a foothold on the property ladder but time is running out. The number of properties eligible for the Government's Home Buy Direct funding are in short supply and all purchases must be completed by the end of March 2010.”
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