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Average first-time buyer deposit doubles to £32,000

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Written by: Victoria Hartley
13/01/2017
The average first-time buyer deposit has more than doubled over the past decade from £15,168 in 2006 to £32,321 in 2016, with the home counties and London driving these upwards.

The average 113% increase in deposit size was dwarfed by London’s rise with deposits leaping 276% from £26,701 to £100,445 with the other four southern regions all at least doubling, according to the Halifax.

By comparison, first-time buyers in Northern Ireland have fared the best with average deposits falling by a fifth from £20,834 in 2006 to £16,695 – the lowest in the UK.

In 2016, 28% of all first-time buyers with a mortgage opted for a 30 to 35-year term, a share that has grown sharply from 11% in 2006. However, the proportion of disposable earnings devoted to mortgage payments by a first-time buyer stood at 32% in 2016 quarter three.

The average national deposit of £32,321 is equivalent to 16% of the average price of a typical first-time buyer home, down from 25% in 2009. Meanwhile, a decade ago, the average deposit was 10%

The research showed the number of first-time buyers is estimated to have reached 335,750 in 2016, up 75% from an all-time low of 192,300 in 2008.

In 2006 just over a third or 36% of all mortgage-financed house purchases were made by first-time buyers, which rose to almost half by the end of 2016 at 49%, rising from 46% earlier in the year. Record low rates have helped drive the trend onward.

In 2016 the average house price paid by first-time buyers was £205,170 – the highest on record.

Martin Ellis, housing economist at Halifax, said:First-time buyers play a crucial role in the housing market, and each transaction has an impact further up the chain, as well as helping to drive levels of house building.

“The number of buyers getting on the housing ladder exceeded 300,000 for the third year in succession – a welcome boost for current homeowners, house builders and the government. Continuing low mortgage rates, high levels of employment have supported the market and government schemes such as Help to Buy have improved affordability, enabling more first-time buyers to buy their own property.”

Just under a third of all first-time buyer purchases in 2016 were below the £125,000 Stamp Duty threshold with 45% of all properties bought by first-time buyers priced between £125,000 and £250,000. All transactions in London were above the £125,000 threshold South East and 90% of properties in the South West incurred Stamp Duty.

Jeremy Leaf, north London estate agent and a former RICS residential chairman, said: “Although lenders are supposed to be providing support via Help to Buy now that the mortgage guarantee element has been withdrawn, on the ground we are finding it is not happening in all cases and more flexibility on lending criteria at higher loan-to-values is required.”

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