First-time buyers struggle as deposit size doubles
The outlook is increasingly bleak for first time buyers. Figures released by the Council for Mortgage Lenders (CML) has revealed that the average deposit needed to secure a mortgage has doubled since the beginning of the economic downturn and that prices many first-time house buyers out of the market.
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Those looking to get that first step on the property ladder now need the equivalent of 87 per cent of the average salary, compared to just 41 per cent four years ago.
Back in 2007, the average deposit needed was £12,000 but today that figure is around £26,000, leaving many young people to turn to mum and dad for help.
In the wake of the credit crisis, mortgage lenders are taking an increasingly careful stance and higher deposits are now the "biggest challenge" faced by first-time buyers.
The CML explained: "We do not expect there to be a significant increase in first-time buyer activity in 2011 or 2012. The reality for first-time buyers is that, although there is widespread sympathy for their plight, they are only one of a number of different types of consumer who are experiencing difficulties in challenging housing and mortgage market conditions."
But mortgage lending has declined across the board. The figures also revealed that lending is down by more than 60 per cent after three years of financial gloom, from £363 billion in 2007 to £136 billion last year. And the CML suggested there is "little prospect of recovery in the foreseeable future".
What do you think? Should mortgage lenders reduce deposit costs for first-time buyers in a bid to get the property market moving? Leave a comment below...
