The number of first time buyers in the UK grew 8% in April despite the introduction of new mortgage rules but the biggest barrier is still large deposits needed even with the Help to Buy schemes up and running.
On an annual basis the number of first time buyers has increased 47%, the latest First Time Buyer Opinion Barometer from Your Move and Reeds Rains, part of LSL Property Services, shows.
It says there is no doubt that the Help to Buy scheme has facilitated more high loan to value lending and first time buyer deposits fell 7.5% year on year to £24,618 in April. It was equivalent to a drop of over £2,000 from £26,623 in April 2013.
Indeed, one in 10 first time buyers say the financial assistance of government schemes such as Help to Buy enabled them to get their foot on the property ladder.
But the research shows that while 94% of tenants registered with Your Move and Reeds Rains wanted to become home owners only 22% are expecting to be able to by the end of 2014. Some 34% believe they will be able to buy within the next five years while 27% believe they will buy at some point in the future, but cannot pinpoint when.
However, the proportion of tenants who think they will never be able to afford to buy has risen to 14% in April 2014, up from 10% in February and lack of a cash deposit remains the biggest obstacle to home ownership with 44% of tenants reporting that saving a deposit was a factor prohibiting them from buying.
‘The tightening of mortgage criteria hasn’t dampened the appetite for first time buyer property. Many more new buyers are making the jump onto the property ladder, while deposit requirements and mortgage rates remain relatively low. Many buyers are locking into fixed rate deals that promise low repayments for the next few years, offers that may not be around much longer,’ said David Newnes, director of estate agents Your Move and Reeds Rains.
But he pointed out that first time buyers in London are feeling the brunt of the impact of the Mortgage Market Review and the tighter lending criteria. Nearly a third of first time buyers in London say they have found it more difficult to get a mortgage since the MMR regulations came into force.
The research also shows that in April, the average first time buyer was 30 years old and earning an annual salary of £36,276. Higher house prices in the capital were reflected in the salary of buyers in London, with the average first time buyer earning an annual salary of £41,667. First time buyers in London paid an average of £293,671 per property in the three months to April, far and away more than all other regions of the UK, including the South East at £195,185.
Northern Ireland was the cheapest region for first timers, with an average purchase price of £85,772. Yorkshire…