Lockdown sees UK housing deposits soar
87% of first time buyers can now afford a housing deposit above £15,000¹
First time buyer activity increased by 185% during 2020, with higher deposits offering them a foot on the ladder²
76% of next time buyers now have a deposit of more than £25,000³
Little evidence that COVID is influencing where people are looking to buy
As the UK finally begins to reopen, online mortgage broker Trussle has revealed its insights on the mortgage market during the coronavirus pandemic. Overall, despite an extremely uncertain economic climate, the UK mortgage market has remained buoyant due to a variety of factors.
The key takeaway from Trussle’s research is that the size of housing deposits have increased dramatically year on year. Faced with limited spending options due to less commuting and the closure of hospitality and retail, many buyers have been able to use the lockdown period to review their finances with the hopes of buying a new home.
COVID & buyer behaviour
Many predicted that homebuyers’ priorities might shift in the post-COVID world, as more living space and outside areas became a necessity for some. In particular, flats, once coveted for their proximity to jobs and amenities, were thought to be in danger of losing their edge.⁴ However, Trussle has found that demand for flats has remained consistent since 2019 and the pandemic has not impacted their desirability for buyers.⁵
Another key pandemic talking point was whether remote working would lead buyers to seek out more rural destinations. And while Trussle has seen an overall downward trend in applications for properties in London since 2019, there is no indication that this has been accelerated by the lockdowns⁶. As a result, urban areas appear to remain popular destinations.
First time buyers
Overall, the lockdown period has seen an increase in first time buyer activity.
First time buyer applications soared during the pandemic, with Trussle reporting a 185% increase in 2020.⁷ This strong demand has continued into 2021, with applications again increasing by 74%.⁸ Perhaps more significant is the size of first time buyer housing deposits, which have increased over the past year. In 2020, only 73% were able to afford a deposit greater than £15,000, but in 2021 this number increased to 87%.⁹
At the onset of the pandemic, lenders did tighten their lending criteria and increase scrutiny towards first time buyer mortgage applications during the coronavirus lockdowns. However, this seems to have been offset by many first time buyers’ being able to save during a period when there was less to spend their money on. Additionally, many first time buyers moved back in with their family to allow them to save more towards a deposit.¹⁰
Next time buyers & remortgaging
Spurred on by the prospect of saving up to £15,000 thanks to the Stamp Duty Holiday, next time buyers also flocked back to the market despite the turbulent economic climate. Next time buyer applications increased by 93% year on year during 2020, and grew a further 85% in 2021.¹¹ Like first time buyers, next time buyers also had greater deposit sizes in the last year. Trussle found that in 2019 only 51% had a deposit over £25,00 when moving home. But, this grew to 67% in 2020 and further increased to 76% in 2021.¹²
With the new incentive of the Stamp Duty Holiday, less homeowners chose to remortgage during the lockdowns. New mortgage applications outpaced remortgaging, with rates falling from 72% of all applications received in 2020 to just 45% in 2021.¹³
While the Stamp Duty Holiday offers significant savings for would-be movers, homeowners should be aware of the cost of accidentally sliding onto their lender’s more expensive standard variable rates (SVRs). Trussle has previously found that customers save £334¹⁴ on average per month by remortgaging onto a fixed rate. So, it’s worth using a remortgage calculator to see if switching could save you money.
Miles Robinson, Head of Mortgages at online mortgage broker Trussle, comments: “Despite the coronavirus pandemic bringing huge economic uncertainty, this hasn’t deterred would-be house hunters, and particularly first time buyers. The market became virtually inaccessible for first-time buyers and those with smaller deposits, as lenders took a more cautious approach and restricted their criteria. However some first time buyers have been able to use this time to save more money towards their housing deposit, and this could explain why activity from this group has soared throughout the pandemic.
While this is all positive news, we should still exercise some caution. There’s evidence to suggest prices have been inflated due to the demand created by the Stamp Duty Holiday, which has led to bidding wars and a lower stock of available properties.¹⁵ Our data shows that the public have been incredibly responsible with their finances and it would be wise to continue with this approach until we reach a greater sense of certainty.”
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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. Trussle internal data on first time buyer deposit sizes collected March 2021
2. Trussle internal data on first time buyer lead volumes collected March 2021
3. Trussle internal data on first time buyer deposit sizes collected March 2021
5. Trussle internal data on applications by property types collected March 2021
6. Trussle internal data on regional distribution of applications collected March 2021
7. Trussle internal data on first time buyer leads collected March 2021
9. Trussle internal data on first time buyer deposit sizes collected March 2021
11. Trussle internal data on next time buyer leads collected March 2021
12. Trussle internal data on next time buyer deposit sizes collected March 2021
13. Trussle internal data on remortgage rates collected March 2021
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