Yahoo Finance It takes a year longer for a first-time buyer to save for a deposit than a year ago
It takes a year longer for a first-time buyer to save for a 15pc deposit on the average home than in 2015, due to house price inflation far outpacing wage growth.
Research by Hamptons International found that to save for a 15pc deposit on an average-priced home, a single buyer in England and Wales must put away 22pc of their income for 11 years and nine months, up from 10 years and nine months in 2015.
Hamptons' Time to Save index assumes that first-time buyers can save 22pc of their disposable income for a deposit, after tax, National Insurance, rent, council tax and spending on food, transport and utilities.
Soaring house prices in the capital last year mean that a single Londoner hoping to buy for the first time would need to save for 18 years and three months for a 15pc deposit, up from 15 years at the end of 2015.
But the greater availability of mortgages at higher loan to value ratios and programmes such as the Government's Help to Buy scheme, which allows first-time buyers to purchase a home with a 5pc deposit, has cut the amount of time it takes to save.
The proportion of loans made at 90pc or more was 5pc last year, up from 3.8pc in 2015.
Fionnuala Earley, director of residential research at Hamptons International said: "Lenders are increasingly offering higher loan to value mortgages and the rates charged on them have come down more than for any other mortgage type.
"Taking advantage of Help to Buy or taking out a 9pc mortgage means that the time to save a deposit falls substantially. Rather than 12 years, a single buyer can save a deposit in just over eight. And if they use help to buy and save just a 5pc deposit, they can save up in just four years.”
It comes as new research from chartered surveyors e.surv found that the proportion of buyers borrowing with small deposits has increased for the third month. They made up 21.4pc of the mortgage market in March 2017, up from 16.1pc in December. The overall size of the market, however, has shrunk by 7.7pc compared to last year.
Richard Sexton, director of e.surv, said: “This is a trend which started at the end of last year and has continued into 2017. Likely buoyed by the number of government schemes and low mortgage rates across the board, small deposit buyers are growing in strength in today’s mortgage market."
