The average first-time house buyer London has had to up the amount they’ve needed to save for a deposit by more than £13,000 since they started saving, according to a new survey.
A survey of 1001 prospective home buyers found that first-time buyers in London are now aiming to save £38,895 for a deposit. The respondents said that this was £13,066, or 50%, more than their initial target when they started saving.
Both figures were higher than the UK average. Across the country, the amount buyers were saving for deposits had increased by £11,500.
With interest rates rising, buyers - especially those with a shorter credit history - are needing to put down bigger deposits in order to keep their monthly payments manageable.
A third of prospective homeowners said that saving enough for a deposit was the biggest barrier to getting on the housing ladder.
Ben Thompson, deputy CEO at the Mortgage Advice Bureau, said: “There are many challenges for prospective buyers to overcome before they get the keys in their hands, and right now, they’re coming from all sides.
“Economic volatility has seen prospective buyers battle high inflation, pushing prices up and limiting the amount they can save. Meanwhile, higher interest rates have lowered the amount they can borrow, meaning bigger deposits are needed. This has led to many prospective buyers having to put more away than they had initially planned.
“Nevertheless, there are some positives that can be taken from this. For those saving for a mortgage, it’s time to take advantage of higher interest rates on savings, with fixed rate accounts in particular offering good rates. Government initiatives, like the Lifetime ISA and Help to Buy ISA (for those who had an account before the scheme closed) can also help. Whatever stage you are at, it’s worth talking to a broker who can help you get mortgage ready.”
