Friday, 24 May 2019

Average mortgage deposit hits £31k

Average mortgage deposit hits £31k

THE average deposit needed by first-time buyers rose by 12 per cent to £30,989 last year, according to research by credit rating firm Experian.

This is up from £27,768 a year ago, while house prices across the UK rose by 2.5 per cent on average during the same period, according to data from the Office for National Statistics.

Experian’s report found that 75 per cent of would-be borrowers were looking for fixed-rate deals in April — up from 72 per cent in March but down from 81 per cent in February.

The main alternative, tracker loans, were being searched for by just 14 per cent. However, just one in four people searching for mortgages had a credit score in the “excellent” band, with around 30 per cent of searchers rated “poor” or “very poor”, making them unlikely to be approved for a loan.

Previous research by Experian had found that 22 per cent of would-be homebuyers said saving for a deposit was the largest obstacle to owning a home.

Mortgage industry figures estimate that the average first-time buyer receives £7,637 towards their deposit from family members — ie the Bank of Mum and Dad — something that Amir Goshtai of Experian Marketplace and Affinity said was understandable in the current climate.

He said: “Gathering enough money for a deposit can seem overwhelming for first-time buyers when you see how much they have to save, while many are reliant on some sort of support from their family to help boost their coffers.

“When people can buy, most are looking at the security of a fixed-rate deal, giving them the assurance of the same monthly payments over the length of the mortgage.

“However, searches for fixed-term mortgages did reduce slightly, which may have been the result of consumers anticipating a resolution to Brexit discussions and greater certainty in the economy.”

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