Accordingly we are seeing an increase in the average first-time buyer age, which is now 32. While lifestyles have changed and more people are choosing to go on to higher education, go travelling, or move around for work, undoubtedly the size of the deposit needed to secure a home is a key driver behind this hike.
Granted, some of these first-time buyers will be joint applicants able to draw on two salaries, or might benefit from other sources of funds, such as ‘the bank of mum and dad’. Some will also be able to rely on the extra time they’ve spent in working life and their associated higher earnings. But all will still find such a sizeable deposit a significant hurdle to overcome.
New, innovative ways to help first time buyers
To help, at Lloyds Banking Group, through our Halifax, Lloyds Bank and Bank of Scotland brands, we’ve recently reduced the deposit requirements for those buying new build homes to 5%, or as low as £4,000 for those buying through a shared ownership scheme.
Bringing the maximum loan-to-value in line with existing properties also has the added advantage of making sustainable homes more attainable for first time buyers. Due to the higher standards required of homes currently being built (since 2012), their average EPC rating is B or better, compared to D or worse for homes built before 1982. This improved energy efficiency has the added benefit of meaning owners of new build houses save over £500 per year on household bills.
This move underlines our confidence in the new build market and our support for the UK construction industry. To develop these changes we have worked closely with the industry and listened to their needs. Just as importantly, supporting new build homes in this way puts weight firmly behind the drive to net zero by making warmer, greener homes more accessible and attainable for potentially thousands of new buyers.
The industry needs to work harder to find new, innovative ways to help people take their first steps in the property market. We are supportive of the government’s proposed mortgage market review which looks set to specifically address what more can be done to help first time buyers, including looking at how more people might responsibly be given access to high loan-to-value mortgages and alternative ways of providing finance and managing risk. In the current environment there is no doubt that collective, innovative thinking is required so homeowning can remain an attainable dream for the majority.