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First time buyers need cheap mortgages

Date: Mon, 30 Jan 2006

First time buyers are now taking around five years to save a house deposit but cheap mortgages could help reduce this period.

The Halifax First Time Buyer Annual Review 2006 shows that the amount of deposit needed by someone stepping on the property ladder has increased over the past five years. In 2000, the average deposit was £9,894, equal to 42 per cent of average earnings. However, this has now increased to £23,967, equivalent to an amazing 76 per cent of the average earnings.

The need to have a substantial deposit means there has been a slowdown in the number of first time buyers entering the housing market – in 2005 there were 10 per cent less people buying a property for the first time compared to the previous year.

"First time buyers need to save harder and for longer than ever before so as to put down a decent deposit on a house. This explains why the number of first time buyers entering the market was close to record lows in 2005," said Tim Crawford, group economist at Halifax.

However, shopping around for a cheap mortgage could help many wannabe homeowners purchase their first dream property, especially as competition within the industry increases.


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