Broken Ladder: 3 years saving to afford a deposit

The Home Builders Federation has released a report, entitled Broken Ladder identifying the increasing lack of affordability in the housing market at a time when supply is critically low – last year saw the lowest number of homes built since 1924 – and mortgage availability almost non-existent.

The shocking figures reveal that on average FTBs in their twenties would have to save 45% of their net income every month for five years to afford a deposit for the average starter home. In London and the South-East the figure is even higher with young people in the capital needing to save 60% of their net income to get on the housing ladder.

This means that even if a person in their 20’s was to save every penny for 27 months, they still wouldn’t be able to afford a deposit. In London it’s 35 months.

Because of this, the average age of the unassisted FTB has rocketed to 37, with even those on higher wages in their thirties struggling to buy. It has resulted in more and more people being forced to stay with their parents with nearly a third of men and a fifth of women aged 20-34 now still at home.

The report also reveals that FTBs aged between 22-29, who are privately renting while saving for a deposit, will have just 13% of their monthly net income remaining for council tax, bills and living expenses – for five years.

Stewart Baseley, Executive Chairman, said:

“These figures reveal the extent of our housing crisis. First-time buyers – the life-blood of the housing market – are almost entirely shut out. The lack of mortgage availability is further strangling a market already choking on a lack of supply. We desperately need an increase in lending and a properly functioning and sustainable mortgage market.

“At the same time, the Government must ensure that the new planning policy and incentives they are basing the success of their housing plans on are put in place immediately. Without more houses and more mortgages, young families will be unable to have the security of a roof over their heads and the housing crisis will very quickly reach the point of no return.”

Andrew Johnson, Director of Kinleigh Financial Services and Andrew Hunt, Sales Manager of KFH’s Muswell Hill branch have offered their advice on what first time buyers can expect and how to stay ahead of the property game.

“Buying your first home should be an exciting time, if you are correctly prepared both financially and in your expectations there is no reason you will not be able to purchase a property” says Hunt. “It is vital to not only have your finances in order but to be viewing properties you can afford, make sure you know the area and the average property prices” advises Hunt. Firstly speak to a financial advisor and secondly talk to an estate agent about what and where you can afford.

“The majority of first time buyers will find a property that meets their requirements but ultimately whether they actually purchase or not is determined by their available capital and their ability to qualify for a mortgage” says Johnson. Acquiring advice from a financial advisor does not need to be expensive; it enables you to gain full professional advice on every aspect of your property purchase without any confusion or hidden costs.

“Mortgage products adjust on a daily basis and the majority of products do not remain unchanged for longer than 24 hours. Due to the unpredictability of the current mortgage market it would be imprudent for any first time buyer not to discuss the best deal with a financial advisor before deciding if a product is right for them. This is particularly important as many advertised deals are out of date or time dependent” Johnson says. “The upfront costs for some deals can be very high and some rates that look initially enticing can quickly become less so when you look at the charges you have to pay upfront. When deposit levels are tight, there are deals that offer free basic valuations and or a few hundred pounds cash back to help with these costs”. Johnson adds. By getting advice on the package as a whole a financial advisor can ensure that the deal is the best for your individual circumstances.

To acquire a mortgage it is very important that you have a good credit rating particularly in this current market. “Make sure you are on the electoral register, making timely minimum payments on your credit cards, keeping within agreed overdraft limits and ensuring where possible that your name is on the utility bills. Finally, completing an application fully and correctly is imperative to giving you the best possible chance of passing the credit score and obtaining the mortgage you want” says Johnson.

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2 thoughts on “Broken Ladder: 3 years saving to afford a deposit

  1. Sir Bashus Moore

    Yes, And its us, in our late middle age that is bailing the banks out from their woeful performance.

    Teenages & 20’s – already in-grain with a spending mentality, now choose to live at home until they’re 30 odd. As parents, we bail -out their spending (which the previous Government encouraged so deeply), support them whilst they continue to “save”, and likely add considerably to the deposit they eventually put down.

    Our reward?

    Troubled pensions, unemployment and falling living standards.

  2. Roxanne

    I can’t believe how you, Sir Bashus Moore, can say that, have you not just read the above article. You have had the good times. I have just turned 24 and daren’t even think about buying. I am a graduate with a good full time job but am living on a shoe string already, 50% of my income goes on rent and bills and the majority of the remainder on food and other necessities. I have recently moved to a rented house with my boyfriend and another friend, with the 3 of us things are still tight with little hope of saving much.
    We made the decision to find our own space and independence by moving out from our parents, at great financial cost, so please don’t give the sop story of awful twenteens hanging on forever, if they can move out the will. My boyfriend has been retraining with the hope of improving his future prospects but with the economy as it is it could be hard for him to find new employment. We are not lazy people; we live in challenging times with irrationally high expectations.
    Aren’t things hard for you with your (probably) paid off mortgage and pension plan. By the time I’m your age we will be working to the age of 70, there will be no such thing as a pension, hopes of sending our children to university will be crushed by unattainable fees and the future outlook is bleak. So please stop winging and appreciate that you have had the chance to be in a position where you have been able to support your children as they struggle to find a place in a turbulent environment. It’s hard for me to see how this will be possible for future generations as the cost of living continues to rise.

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