You now need to put down almost three times the average salary as a deposit if you want to get a contractor mortgage! In September the average home buyers’ deposit was a massive 43%. Four years ago, £50,000 would have been sufficient to meet the then 30% deposit requirement.
And the bad news just keeps on coming. Last week, the Bank of England warned that mortgage lending institutions are becoming stricter amid fears that rising unemployment will lead to more people defaulting on their mortgage.
Meanwhile, surveyors e.surv has discovered that not all purchasers are being treated the same. People buying properties in the lower price bracket typically need a 35% deposit compared to the 25% they needed four years ago. This means the amount they can borrow has decreased by 10%. However, people buying a house worth £500,000 or more have seen their borrowing power reduced by just 4%.
The business development director of e.surv, Richard Sexton, pointed out that 20% of buyers want to purchase a property worth less than £125,000. Typically they will be first time buyers but their access to finance is well behind wealthier home buyers.
House prices are currently declining and interestingly enough now stand at virtually the same level they were four years ago. The difference being that the deposit is now £20,000 more than it was then.
Who could forgive the majority of potential first-time buyers from simply giving up hope?
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