First-time buyer deposits to soar 57% by 2027, warning

The average first-time buyer deposit could soar by more than a half in the next decade, a mortgage broker has warned.

L&C Mortgages has compared figures from the ONS House Price Index showing how much a first-time buyer typically pays in each UK region as well as the average mortgage in each area to give an idea of the deposit required.

ONS figures show that first-time buyers pay £212,411 for an average property and typically borrow £160,591, meaning a deposit is £51,820, the broker said, and it claims that based on how much house prices have grown over the past 20 years it could reach 57% more at £81,468 by 2027.

On a regional basis, buyers in the capital currently pay on average £139,987 in deposits but could see this grow by 75% in 2027 to £244,842.

Belfast buyers could see the smallest increase at 41% to £41,755.

The research also looked at how buyers would fund purchases, with 44% expecting their deposit to come from their own cash savings, a further 15% using a Help to Buy Isa and 6% a Lifetime ISA. A further 11% expected it to come from family members, and 6% will use an inheritance.

On average, first-time buyers have currently saved £16,436 towards their deposit, and predict it will take three years and eight months in total to raise the full amount.

Almost a quarter said they haven’t saved a penny towards a deposit.

David Hollingworth, a mortgage adviser at L&C, said: “With this research predicting that the size of deposits required could rise considerably across the country, first-time buyers could be forgiven for giving up hope on owning their first home.

“There is some stark variation between cities, but the fact that London deposits could be almost hitting a quarter of a million pounds by 2027 is alarming.

“It makes sense for first-time buyers to try and raise as big a deposit as possible but that is very much easier said than done in today’s current climate.

“Although there are mortgage deals available to as much as 95% of the property price, rates on these types of deals will be higher than for those who have saved a larger deposit.

“Given the level of commitment that first-time buyers are having to make, it’s of little surprise that they are often electing to fix their mortgage rate so they know where they stand with their mortgage payments.”

UK cities

Deposit needed today

Deposit needed 2022

Deposit needed 2027

Total % increase by 2027

London

£139,987

£188,966

£244,842

75%

Brighton and Hove

£77,407

£100,032

£125,280

62%

Bristol

£58,035

£74,192

£92,062

59%

Norwich

£40,890

£51,626

£63,364

55%

Edinburgh

£37,661

£47,467

£58,204

55%

Southampton

£45,262

£56,775

£69,349

53%

Cardiff

£34,400

£42,593

£51,485

50%

Leeds

£29,589

£36,633

£44,252

50%

Manchester

£28,672

£35,513

£42,912

50%

Birmingham

£30,602

£37,792

£45,564

49%

Plymouth

£36,384

£44,762

£53,806

48%

Sheffield

£26,193

£32,263

£38,797

48%

Glasgow

£21,876

£26,904

£32,291

48%

Nottingham

£25,132

£30,693

£36,650

46%

Newcastle upon Tyne

£26,037

£31,826

£38,046

46%

Liverpool

£21,292

£25,852

£30,716

44%

Belfast

£29,682

£35,528

£41,755

41%

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