Government mortgage market review for first-time buyers

June 15, 2022

It’s been widely reported just how difficult it is for first-time buyers to step onto the property ladder. Whilst schemes such as Help to Buy certainly enhance affordability, the average deposit required continues to soar.

The prime minister has pledged to turn ‘Generation Rent’ into ‘Generation Buy’, as he announced a review of the mortgage market with a view to helping more first-time buyers achieve their dreams of buying their first home.

The current market of rising house prices, strict lending restrictions, and high deposit requirements are significant hurdles for those thinking of making the move to buy.

The Prime Minister has said they will explore the availability of low-cost finance, such as 95% mortgages to alleviate the stress of rising deposits.

“First-time buyers are trying to continually hit a moving target. By the time they’ve saved for a deposit, prices have risen and it’s no longer enough. The rise in the cost of living is only making life harder for savers, so we want it to be easier to get a mortgage." Boris Johnson

More than half of today's renters could afford the monthly cost of a mortgage, but various constraints mean only 6% could immediately access a typical first-time buyer mortgage.

Recent research from Rightmove demonstrates that rental payments have increased by 40% compared to 10 years ago, whilst monthly mortgage payments have only increased by 11% in the same period due to low-interest rates.

The average solo first-time buyer now needs a £74,000 deposit. This figure has doubled in the last decade and an increase of 112%. However, those buying as a couple would need £22,312. Two salaries open up borrowing opportunities with more 10% deposit options available.

Whilst this review will be welcome news for anyone currently saving for their first deposit, we will likely need to wait until the autumn for any results to be published.

If you’d like some advice on what you can afford, we’d be happy to introduce you to our independent financial advisors, or for more information on Help to Buy, our new homes sales advisor at Fleet Mill would be able to assist 01252 961717.

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