UK first-time buyers are increasingly searching for properties they believe are a good investment and are saving for a deposit by using high interest savings accounts a study has shown.
45% of customers seeking first time buyer mortgages, who purchased a property in the last twelve months believe the main reason for purchasing was based on the property being a good investment. The research undertaken by Yorkshire Building Society has also found that nearly half bought because they felt renting was a waste of money. The view of potential purchasers however is less healthy with a fall in the numbers on who would buy now decreasing from 13% to 6%. The number of buyers requiring finance and help from family and friends increased to 10%.
Over 50% of those getting onto the property ladder for the first time, opted for a fixed rate mortgage versus other mortgage types, on the basis that a fixed rate gave greater security over rate movements at an important time.
The study concluded that the average deposit now required for first time buyers is £26,000 and deposits were being saved through the utilisation of regular savings accounts. The concern with the study is the conclusion that it takes 18 years and 10 months to save for a deposit in Greater London area given the average deposit is £61,167. This compares to the North East where it is estimated an average of £14,691 is saved over four years and five months.
It is clear that the figures show that first time buyers continue to be squeezed by the historic inflationary pressures on housing and the fact that incomes and pay rates are not keeping pace.
