First-time buyers more reliant on loans from grandparents
According to research from Santander, one in three first-time buyers expects to ask for a family loan to help purchase their first property – almost three times as many as current home owners, who asked for financial help from their families.
The study also found that on average first-time buyers expected their deposit would be 32% of their annual salary, but 19% predicted it would consume half their income.
In comparison, current homeowners estimated that when they bought their first home, their deposit was an average of 20% of their yearly income, with only 5% spending more than half their salary on a deposit.
Despite the extra help from family members, first-time buyers expect to spend an average of five years saving for a deposit – a whole year longer than those who bought their first property five years ago.
Current first-time buyers blamed increased living costs cutting their potential saving power.
The research questioned 2,004 UK adults of which 395 said they were looking to buy their first property.
It revealed a sizeable gender imbalance when regarding deposits as almost a quarter (23%) of women expected to spend more than half of their annual salary on their deposit.
However, this fell to just 14% of men.
Loans from grandparents were increasingly one source of capital for first-time buyers, growing from 2% five years ago to 8% of present buyers.
However, despite these struggles new buyers were perhaps surprisingly upbeat as 45% were more positive now than a year ago, while 20% said their confidence had declined.
The research also found that the health of the UK economy had little effect on those planning to buy.
A sizeable minority (44%) said while they were concerned, they would go ahead with their purchase regardless of the wider economy, and 39% added that economic factors would not affect their decision to buy at all.
Santander UK managing director of mortgages Miguel Sard (pictured) said first-time buyers were using alternative income streams over and above their salary.
“Today’s first-time buyers are demonstrating resilience and determination to achieve their home ownership goals,” he said.
“The purchase of a first property still remains high on the priority list for many people across the UK and it’s encouraging to see so many first-time buyers feeling positive about the year ahead.”