Tuesday, Jan 27, 2009
“Homeownership is beginning to look a much more realistic goal for thousands of 1st time buyers"
Mortgagestrategy: Average first-time buyer putting down £20,000 deposit
Almost two fifths of prospective first-time buyers are increasing the rate at which they save towards a deposit in 2009, with the average saving £20,000, shows research from Abbey Savings. Some 38% of those already saving towards a deposit say they are looking to increase the rate at which they put their money away in 2009. Meanwhile, 40% of those without any form of deposit stated that they had now decided to start saving this year. With house prices looking increasingly affordable, those with a deposit said that they intended to try and save on average an extra £203 each month this year in order to get on to the property ladder, while those who were just beginning to save a deposit said that they intended to put away £123 on average each month.
14 Comments
- If you do not have an admin password leave the password field blank.
- If you would like to request a password allowing you to add comments and blog news articles without needing each one approved manually, send an e-mail to the webmaster.
- Your email address is required so we can verify that the comment is genuine. It will not be posted anywhere on the site, will be stored confidentially by us and never given out to any third party.
- Please note that any viewpoints published here as comments are user's views and not the views of HousePriceCrash.co.uk.
- Please adhere to the Guidelines
1. paul said...
Ironically, this will only serve to prolong the recession though. And people without jobs don't tend to save much.
2. bystander said...
spot on Paul, an average punter putting away 230GBP/ month would need to save for 10+ years to save the deposit of 26K for a poxy one/ two bed in the South east, while those looking to buy further North would need to save for at least 7 years. Those putting away 120GBP/ month will double this. If this is what will drive the next housing boom, Capital economics weren't too far off when they said prices wouldn't return to 2007 levels until 2032.
3. montesquieu said...
£200 a month is £2400 a year, so only 8 years or so till they can afford that £20k deposit ... what a pointless non-story.
4. doom&gloom said...
"Meanwhile, 40% of those without any form of deposit stated that they had now decided to start saving this year".
Or maybe read, "40% of those with no savings whatsoever, and credit card debt, who spend their wages on the latest must-have flatscreen TVs, cigarettes and in the pub, said this is the year they will DEFINITELY start saving. Honestly guvnor".
5. submedia said...
On the positive note it is encouraging to see them wanting to save which may help shift the spending paradigm for a good proportion of younger people. We must remember that when you have made that effort to save you are less willing to spend it with risk. Hopefully, when these guys have got their money together they will be wiser and be more demanding with what they get for it.
6. Economicvoicedotcom said...
Those with a deposit still need a mortgage by definition. As the recession bites lenders' caution will increase. This will keep actual house sales down and drive prices relentlessly down.
7. Fallingknife said...
So if the average first time deposit is 20k, then the average first time house needs to be around 80k, based on all mortgage deals I've seen lately. Long way down yet.
8. peter_2008 said...
Well, if everyone cuts 10% spending, does that mean deflation? This is increasingly looking like Japan now.
9. quiet guy said...
Doesn't the good news/bad news angle depend on how the savings are achieved? If people save by cutting back on foreign holidays and expensive imports then it definitely looks good to me. We need a savings culture.
10. Solo said...
My reading of the article with regards to the average of those already saving is as follows:
20k already in the bank and
"those with a deposit said that they intended to try and save on average an extra £203 each month this year"
There is no mention of the existing rate of savings ... and the above sounds like an increase in the rate of saving.
(assuming 0% interest rate for simplicity and lets face it not such a big assumption these days!)
Assuming that the existing rate is ZERO then 12 months hence: 22.4k
Assuming that they are doubling the rate of saving (existing rate=203) then 12 months hence: 24.8k
Assuming that they are increasing savings rate by a third (existing rate=406) then 12 months hence: 27.3k
"Those in London said that they believed they would need £26,641"
So my reading of the article is that the people who have already started saving are on track to have approx 26k deposits at end of the year.
People who start saving at 123 per month will take 18 years to get the 26k deposit (assuming 0% interest) so they are out of the picture!
What would be interesting to know is what LTV these savers are expecting to borrow at:
26k deposit at 90%LTV = 260k property (2 bedroom flat in nice parts of london?)
26k deposit at 85%LTV = 173k property (1 bed flat in nice parts of london?)
26k deposit at 80%LTV= 130k property (1 bed flat in so-so parts of london?)
Interesting... Would also be interesting to know if these were individuals savings or couples savings.
Glad my deposit is approx double the existing average. I hope I am saving faster than the average too!
Food for thought!
11. japanese uncle said...
I say again, if you know what's good for you, just stay away for at least another two or three years from the property market.
12. will said...
Abbey Finance spinning the housing market again. The reason you 'need to save £20K deposit' is to satisfy Abbey's borrowing criteria.
13. Stingray said...
Should the phrase "property ladder" not be replaced by "property snake" for the next few years ?
14. beartil2010 said...
Yes - easy to save money then buy your first house when you've just lost your job! Argh!