Halifax

First-time buyers face highest deposit in a decade

12 September 2019

  • Deposits for a first home have risen on average 52% over the past decade

  • Halifax unveils 2.90% family support mortgage for first-time buyers to borrow 100%

  • First-time buyers are putting down more than £40k to get the keys to their first home

First-time buyers in the UK are putting down the highest deposits in a decade, despite more than double the number of new homeowners stepping on to the property ladder.

New data from Halifax revealed that there were more than 170,000 first-time buyers in 2019 – more than double the record low of 72,180 in 2009, despite deposits having risen by 52% over the same period. (See table 1)

The average deposit for those buying their first home is a staggering £41,099 – just under a fifth (18%) of the house price – an increase of 52% from £27,059 in 2009. This is despite a 2% decrease over the last decade in deposit as a percentage of the total house price. In London, the average first-time buyer deposit is £101,389 (22% of the purchase price), which is almost double that of 2009 (£50,944). (See table 3)

Halifax has launched the Family Boost mortgage to help first-time buyers without a deposit, where savings from parents or other family members can be used to provide security for 10% of the loan. The three-year mortgage is fixed at 2.90% with no fee, while the deposit savings are held at a fixed rate of 2.5% for the same period. At the end of the three years, provided that the mortgage payments have been kept up to date, the savings and interest will be returned to the supporter.

The new mortgage is designed to help more people own their own home in a market where the average price for first-time homes has climbed from £138,413 in 2009 to £224,709 – a 61% increase in the past decade. This is against the backdrop of a 51% increase in house prices across the market. First-time buyer house prices in London have almost doubled, and those in the South East have risen 65%, while Northern Ireland has seen a 2% dip. (See table 10)

Russell Galley, Managing Director, Halifax, said: “While increasing numbers of first-time buyers is good news for the housing market and they are not far off the peak of the last boom which was just under 190,000 in 2006 – it’s saving enough to get a foot in the door that’s still the biggest blocker.

“As part of our commitment to lending £30bn to first-time buyers by 2020, we are offering families a way to help give the next generation the boost that they need to get on to the property ladder, while providing competitive rates to both buyer and supporter.”

First-time buyers make up more than half (52%) of the UK’s mortgage financed house purchases, compared to 38% in 2009. This share has grown since 2013 when the Help to Buy Scheme was introduced, which has given 179,816 first-time buyers (81% of total purchases under the scheme) a step on to the housing ladder over this period. (See table 2)

The average age of a first-time buyer is 31, having slowly crept up over the past decade from 30. The oldest are in London (33), while the youngest first-time buyers can be found in Amber Valley in the East Midlands, where the average age is 27. Half of the UK’s regions have seen first-time buyer age go up by two years over the past decade. (See table 5)

Local outlook Half of the 10 most affordable Local Authority Districts (LADs) for first-time buyers are in Scotland, while the 10 least affordable LADs in London.

Over the past decade, the number of ‘affordable’ areas have reduced from 83 to 38. The most affordable is East Ayrshire in Scotland, with Brent in London the least affordable. (See tables 8 and 9)

Regionally, deposits as a percentage of purchase price in the South West and Northern Ireland have seen the biggest decreases – dropping by 4% to 18% and 17% respectively. First-time buyers in Yorkshire and the Humber, Wales and East Midlands have to find the lowest deposit – 16% of purchase price, compared to London at 22%. (See table 7)

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