According to the latest First Time Buyer Monitor produced by LSL Property Services, mortgage
lenders are about to reduce deposit requirements. The company found that although first time
buyer transactions dropped by 3.7% in August, the average loan-to-value figure increased from
78.9% to 81.5% - its highest since July 2011. As a consequence, the average deposit felly by £26,285,
which is 8% lower than it was in July.
LSL also found that first time buyer house prices increased by 4.7% to £141,918 in August. However,
the average income of a first time buyer also increased. In August, data showed that deposits
represented 73% of the average first time buyer’s annual salary. In August, the average FTB was 29
and had an income of £36,000, some 2.9% higher than the £35,000 average recorded in July. LSL
also found that 44% of first time home purchases were self-funded in comparison to 39% in May.
Mortgage repayments accounted for 22.2% of annual income, down from 23.4% in July.
The majority of FTBs said they were looking for houses with two or more bedrooms. Some 28%
wanted a two bed house, with 51% hunting for properties with three or more bedrooms. Some
14% said they were looking for two bedroom flats. Most FTBs said they expected house prices to
increase by 3.2% in the next year, and also that they expected to stay living in their first property for
an average of seven years.
David Newnes, director of LSL, said: “There are encouraging signs that lenders are relaxing deposit
requirements, but it’s not translating into increasing first time buyer purchases. In fact, following a
seasonal drop off in August, first time buyer numbers are back to their level of a year ago.
Lending criteria remains incredibly stringent, and lenders are cherry picking those new buyers with
the very cleanest credit histories and largest incomes, limiting the number of buyers able to take
advantage of deals with the very highest LTVs.
There’s clearly underlying demand for home ownership, but the size of the gap between those
who’d like to buy and those who actually can reflects the frustration of thousands of potential
The size of the average deposit may have dipped in August, but tenants are still baulking at the
prospect of saving over £26,000 at a time when rents and the cost of living are rising at a greater
rate than salaries.”
Source: Property Wire.