Single mum Michelle Steele dreams of owning her own home - but the cost of living crisis has forced her to dramatically cut her savings.
The 44-year-old, an assistant manager working at a UK bank, lives in a rented flat in southeast London with her son Louis, aged 16.
She used to put away £100 from her salary each month toward a house deposit, but has now had to slash this by 75% to £25 due to rising costs.
It means she now doesn’t know when she will be able to get on the property ladder - a worry felt by thousands of savers across the country.
New research by OneFamily named the cost of living crisis as the main issue preventing people from growing their savings.
Of all the respondents, 62% pointed to rising food costs as a major problem, and 59% named energy costs as a contributing factor.
“I’m not where I’d planned to be at this stage in my life since I wasn’t able to get onto the housing ladder when I wanted to,” said Michelle.
“I was saving £100 from my salary, but I’ve had to reduce it to £25 each month because my food costs have gone up from £50 each week to £150 and I have a growing teenager to feed.
“I don’t shop extravagantly, mostly Aldi or Lidl, and definitely not the expensive brands. My car now costs £60 to fill it up, whereas that used to be £40. Times are tough.
“On the plus side, I moved to a newbuild flat last year that is very energy efficient with underfloor heating.
“It really has been a blessing; my energy bills are affordable and I’m quite warm – unlike my elderly grandmother who refused to put her heating on and she’s been sitting there shivering.”
Michelle is currently using a Lifetime ISA to save for her first home, which gives you a 25% bonus from the Government on your savings.
Lifetime ISAs allow you to save £4,000 every tax year, meaning you can get a maximum annual bonus of £1,000.
You can read more about the help currently available for first-time buyers here.
On top of the gruelling task of saving for a deposit, would-be homeowners are battling against rising mortgage costs - which means proving you can afford a property is now much more difficult.
Banks and lenders assess the monthly payment you can afford, after looking at your outgoings as well as your income.
Mortgage rates have soared off the back of twelve Bank of England interest rate hikes since December 2021.
The average interest rate on a two-year fixed mortgage hit 5.9% this week, up from 5.26% at the beginning of May, according to finance site Moneyfacts.
A year ago, rates on two-year fixed mortgages were averaging 3.25%, versus 2.59% back in 2021.
Matthew Ellis, Sales and Marketing Director at OneFamily said: "It’s no wonder that the majority of this generation of young adults don’t own their own home when an increasing number of families are having to live payday to payday.
"Salaries are lagging behind the rises in the cost of living, and with rent to pay, putting aside money for a deposit may seem impossible.
"If young people had the chance to learn about personal finances earlier in life, it may help them have more options to save for the future."
