£5billion’s worth of savings burning a hole in first-time buyers’ pockets

  • 69%¹ of first-time buyers priced out of the market 

  • 76%² of first time buyers feel worried, confused and angered by the mortgage market 

  • Trussle has created a deposit map to help first time buyers quantify the amount required to buy in each region of the UK³

The fact that first time buyers are finding it hard to navigate the property market at the moment is not ‘new news’, however the amount of money that’s held up most certainly is. It's estimated that their difficulty to enter the market is putting £5billion⁴ worth of property deposits in limbo, which is not only considerably slowing the market but potentially stalling its recovery as well. Looking at everything from mortgage limitations to deposit requirements, online mortgage broker, Trussle, is working hard to ensure that FTBs have the best available tools to navigate the property market. 

A survey of 2,000 first time buyers in the UK has shown that over half of first time buyers take over five years to save enough for a deposit⁵ . With 72%⁶ of first time buyers in a position to look for a home within the next two years, it’s no surprise that 40%⁷ of respondents feel confused by the constantly changing deposit requirements and lender criteria.

The pandemic is continuing to impact every aspect of life, and home buying is certainly not immune. 76%⁸ of first time buyers feel worried, confused and angered at how COVID-19 has affected their home ownership aspirations. 65%⁹ of first time buyers feel it’s ‘impossible’ to get on the property market and over half (62%)¹⁰ of first time buyers admit defeat and have opted to save for another year or more. 

However, the feeling is not the same in every area of the country, with first time buyers in the North East finding it easier to get on the property ladder than those in the South. While this is likely due to lower house prices, it’s worth remembering that cost of living  also varies regionally¹¹. To put this into context, 71% of Liverpool’s first time buyers have managed to save enough for a deposit without help from their family or loved ones, whereas 42% of Bristol’s first time buyers have had to rely on the Bank of Mum and Dad¹².

With enquiries for rural village properties skyrocketing 126%¹³, a move further out could be an option to get the collective £5billion¹⁴ out of pockets and into action. However, with 40%¹⁵ of first time buyers admitting to being confused by their options, it’s likely that first time buyers are struggling to quantify how much they need to save to afford a home further afield.

To help first time buyers understand deposit requirements across the UK, Trussle has created a deposit map that can be used to  see what options may be available for the deposit they’ve managed to save. 

It’s also important for first time buyers to remember that the Stamp Duty holiday will be coming to an end on 31st March 2021. While it has been widely reported that the last day for making the deadline was 31st October¹⁶, using a digital mortgage broker has been proven to get mortgages over the line faster than a traditional broker. The average wait time for buyers from mortgage application to property completion is 162 days¹⁷, but wait times with Trussle are currently between 96-166 days¹⁸, depending on location. Trussle has created a graph which estimates how long it’ll take you to complete on a home, depending on the area you’re buying in.

Miles Robinson, Head of Mortgages at Trussle comments: “While it’s encouraging to see the property market remaining open for business with viewings and valuations remaining in place during the second lockdown, it’s disappointing that first time buyers are struggling to navigate the market. 

One option for first time buyers is to adapt expectations when it comes to location, exploring more affordable areas and seeing the working from home option as a long term alternative. However, the onus cannot continue to sit purely on the first time buyer and their transactional power cannot remain untapped as we head into an uncertain 2021. 

The financial impact of the pandemic has meant that lenders are pulling a number of high LTV mortgages. As of this week, there are only 74 mortgage deals available for mortgage applicants with a LTV over 90%. By comparison, this time last year there were over 2,000¹⁹. 

While lenders are right to be cautious given the  economic climate, any sustainable recovery for the property market will need to see activity amongst first time buyers. And, the demand is there. At Trussle, we’ve seen enquiries from first time buyers grow by approximately 230% compared to this time last year.²⁰ 

We’d like to see lenders beginning to reintroduce higher LTV products that will help first time buyers. In the meantime, we hope this map will help first time buyers to quantify the areas worth considering.”

~Ends~

Contact

For further information, please contact:

Emily Coyle at [email protected] or Leilah Mackie at [email protected] 

We’ve taken extra care to ensure the information provided within this release is presented in a way that’s compliant with regulatory requirements. If you have any questions about how to repurpose this information or require any further assistance, please contact Leilah Mackie at Trussle.

1. Source: Trussle research October 2020  Calculation: 2005 respondents were asked ‘To what extent do you agree with the following? House prices are too high in the areas I want to live’ 33.7%  answered ‘strongly agree’  35.3%  answered ‘agree’  Total = 69%

2. Source: Trussle research October 2020  Calculation: 2005 respondents were asked How does the mortgage market make you feel? Select all relevant  1111 answered worried  368 answered angry  890 answered confused Total = 76%

3. ‘Region’ relates to postcode district within UK

4. Source: Trussle research October 2020 Calculation:  356,000 first-time buyers in 2019 - https://www.finder.com/uk/first-time-buyer-statistics Length of Coronavirus pandemic – 218 days 356,000 x 218/356 = 218,000 first-time buyers during pandemic BUT 65% waiting for it to pass before purchasing (Q11 minus those already in the process of buying) 65% x 218,000 = 141,7000 new first-time buyers after pandemic Avg. deposit % = 20% Avg. property purchase price according to Trussle  survey data = £174,266 – Q4 Avg. deposit value: 20% x £174,266 = £34,853 Economy injection = 141,700 x £34,853 = Approx. £5 billion

5. Source: Trussle research October 2020  Calculation: 2005 respondents were asked ‘From the moment you decided to buy your first home, how long has it taken/how long would it take for you to save up for your deposit?’ 692 answered up to 5 years  239 answered up to 10 years  46 answered 11 to 15 years  25 answered 16 - 20 years  21 answered more than 20 years  Total = 51%

6. calculation: 2005 respondents were asked ‘When do you plan to purchase a home for the first time?’ 6% answered ‘I am in the process now’ 12% answered ‘Within the next 6 months’  24% answered ‘Within the next year’ 30% answered ‘Within the next 2 years’  Total = 72%

7. Source: Trussle research October 2020  Calculation: 2005 respondents were asked How does the mortgage market make you feel? Select all relevant  890 answered confused Total = 40%

8. Source: Trussle research October 2020  Calculation: 2005 respondents were asked How does the mortgage market make you feel? Select all relevant  1111 answered worried  368 answered angry  890 answered confused Total = 76%

9. Source: Trussle research October 2020  Calculation: 2005 respondents were asked ‘To what extent do you agree with the following? It’s impossible for First Time Buyers to get on the housing ladder these days ’ 555  answered ‘Strongly agree’  740  answered ‘agree’  Total = 65%

10. Source: Trussle research October 2020 Calculation: 2005 respondents were asked ‘To what extent do you agree with the following? I have decided to wait for the impact of the COVID 19 pandemic to pass before I make any further moves in buying a home’ 27%  answered ‘strongly agree’  35%  answered ‘agree’  Total = 62%

11.  https://www.idealhome.co.uk/news/best-cost-of-living-uk-215296

12. Source: Trussle research October 2020  Calculation: 2005 respondents were asked ‘How are you planning to finance your first home? Loan from other family members (e.g. grandparents, parents or other family members?)  105 Respondents from Liverpool -  answered ‘yes’ 28% / answered ‘no’ 72%  113 Respondents from Bristol - answered ‘yes’ 42% / answered ‘no’ 58%

13.  Source: https://www.rightmove.co.uk/news/articles/property-news/escape-to-the-country

14. Source: Trussle research October 2020 Calculation:  356,000 first-time buyers in 2019 - https://www.finder.com/uk/first-time-buyer-statistics  Length of Coronavirus pandemic – 218 days 356,000 x 218/356 = 218,000 first-time buyers during pandemic BUT 65% waiting for it to pass before purchasing (Q11 minus those already in the process of buying) 65% x 218,000 = 141,7000 new first-time buyers after pandemic Avg. deposit % = 20% Avg. property purchase price according to Trussle  survey data = £174,266 – Q4 Avg. deposit value: 20% x £174,266 = £34,853 Economy injection = 141,700 x £34,853 = Approx. £5  billion

15. Source: Trussle research October 2020  Calculation: 2005 respondents were asked How does the mortgage market make you feel? Select all relevant  890 answered confused Total = 40%

16. https://metro.co.uk/2020/10/29/this-is-when-you-should-submit-your-mortgage-application-if-you-want-to-save-thousands-on-stamp-duty-13501794/

17. Source: https://www.mortgagesolutions.co.uk/news/2020/10/28/more-than-400000-home-sales-clog-up-property-pipeline-after-buying-surge/

18. Source: Trussle average wait time as of 29.10.20

19.  Data gathered by Trussle on 22.09.20

20. Internal data from Trussle, accurate as of 22.09.20

About Trussle

Trussle helps people love their journey of owning a home. We’re your free online mortgage broker, helping you wherever you are on the ladder.

See how much you could borrow or save in minutes. Whether you're looking at homes for the first time, or you're looking to remortgage for the fourth time. Our quick online calculators will help you take the next step on your home ownership journey.

Say goodbye to paperwork, long phone calls, and being left out of the loop. Say hello to a quick, jargon-free, personal service that you can access from anywhere at any time. We’ll help you find and secure your mortgage entirely online.

Relax while we ensure you're always on the right deal. We compare your mortgage with the latest deals on the market every day, and we’ll alert you the moment it's time to switch to a more suitable deal. That way, you'll never pay more than you should to own your home.

Did we mention that our service is completely free? Join Trussle to see where your home ownership journey could take you.

In September 2016 Trussle launched an industry-first partnership with online property portal Zoopla, making it possible to find and buy a home in one seamless experience. Trussle is backed by some of Europe's leading technology investors including Orange Growth Capital, LocalGlobe, Ed Wray (founder of Betfair), Ian Hogarth (founder of Songkick), Seedcamp, and Zoopla Property Group.

Trussle is a trading style of Trussle Lab Ltd, which is an appointed representative of Mortgage Advice Bureau Limited and Mortgage Advice Bureau (Derby) Limited which are authorised and regulated by the Financial Conduct Authority.

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