New industry data has revealed that the number of low-deposit mortgages available have risen to their highest level since the financial crisis of 2008, with 845 products available for a 10% deposit, and 442 for a 5%.
However, despite this, a study by Barratt Homes has found that only 40% of first-time buyers know they can buy a home with a low deposit – meaning many are potentially spending longer to save larger amounts.
To find out more, Barratt took a look at how much Brits are currently saving, the challenges they face, and how first-time buyer schemes are helping people make that first step onto the property ladder.
Financial saving habits across the UK
Previous data collected by Barratt found that the average age of first-time buyers in the UK is 33.5 years, with half of first-time home purchases happening between the ages of 25 and 34.
Digging deeper into this age range, they also uncovered the average amount both Gen Z and Millennial homebuyers set aside each month to save for a down payment:
- Gen Z (aged 18-28): £274.19
- Millennials (aged 29-44): £244.92
With this in mind, almost two-thirds (61%) of British Millennials and Gen Z’ers (18-44 year olds) believe it will take five or more years to save for a house deposit.
A further 15% also think it will take 12 years to save for a house deposit.
However, at the rate Brits are actually saving, it would only take 5.1 years to save a 5% deposit for the average UK first-time buyer home, and 2.1 years for a 2% deposit – a lot quicker than initially expected.
In some cases, 100% mortgages or no deposit mortgages are now being offered by some lenders where the lender provides a mortgage for the full amount of the property’s purchase price.
As for which saving measures homebuyers are adopting, setting up a dedicated savings account tops the list, with 38% doing so.
This is followed by 32% cutting back on socialising in a bid to cut back on any unnecessary spending.
Other measures taken include working longer shifts/more hours, with 24% doing so, as well as 14% taking on an additional job, and 12% pushing for a pay rise at work.
Family members also play a crucial role in assisting first-time buyers, with 15% leaning on their family to contribute financially to a deposit, and 14% moving back in with family in a bid to save on rent payments.
How long does it take to save?
By matching monthly savings data with up-to-date UK house prices and low-deposit options, Barratt found something striking: first-time buyers who opt for a 2% deposit instead of 25% can shave around 23.5 years off their saving timetable.
This drops the needed house deposit to as little as 3-4k in some UK regions.
| County | Average House Price | 25% Deposit | Years to save | 2% Deposit | Years to save | Time Saved |
| North East | £163,679 | £40,920 | 15.5 | £3,274 | 1.2 | 14.2 |
| Northern Ireland | £185,108 | £46,277 | 17.5 | £3,702 | 1.4 | 16.1 |
| Scotland | £191,927 | £47,982 | 18.1 | £3,839 | 1.5 | 16.7 |
| Yorkshire & Humber | £204,410 | £51,103 | 19.3 | £4,088 | 1.5 | 17.8 |
| Wales | £209,728 | £52,432 | 19.8 | £4,195 | 1.6 | 18.2 |
| North West | £212,057 | £53,014 | 20.0 | £4,241 | 1.6 | 18.4 |
| East Midlands | £238,635 | £59,659 | 22.5 | £4,773 | 1.8 | 20.7 |
| West Midlands Region | £246,910 | £61,728 | 23.3 | £4,938 | 1.9 | 21.5 |
| England | £290,956 | £72,739 | 27.5 | £5,819 | 2.2 | 25.3 |
| South West | £301,660 | £75,415 | 28.5 | £6,033 | 2.3 | 26.2 |
| East of England | £337,920 | £84,480 | 31.9 | £6,758 | 2.6 | 29.4 |
| South East | £383,486 | £95,872 | 36.2 | £7,670 | 2.9 | 33.3 |
| London | £561,309 | £140,327 | 53.0 | £11,226 | 4.2 | 48.8 |
To support first-time buyers, many housing and development companies are putting schemes in place to make home ownership more accessible.
Barratt Homes has a number of options available to make the homebuying journey as smooth and easy as possible for first-time buyers and existing homeowners.
- Own New – Rate Reducer: Available on new build homes, the scheme is designed to enable lower mortgage rates (below 2.2%) and reduced monthly mortgage repayments. Barratt Homes will contribute either 3% or 5% of the purchase price towards the move, reducing the interest rate by up to 2.66%.
- Key Worker Deposit Contribution: For every £20,000 spent on the purchase price of a new home, Barratt Homes will contribute £1,000 towards the deposit for key workers, up to £25,000.
- Parent Power:Barratt Homes will match any financial contribution from family members, up to 5% of the purchase price.
Adrian MacDiarmid, Head of Mortgage Relations at Barratt Redrow, commented:
“Our research found that not enough first-time buyers and their families are aware of schemes to help them, from the Government, new build developers, and lenders.
“With rising house prices and the increased cost of living, support from parents and other family members remains crucial for many. However, there are a wide range of schemes available to support first-time buyers, meaning family support isn’t the only route to homeownership.
“At Barratt Redrow, we’re focused on offering a mix of affordable homes and tailored support to help more people to take their first step onto the property ladder.”
For more information, please see the Barratt Homes website: https://www.barratthomes.co.uk/advice-and-inspiration/first-time-buyer-report/
