First-time buyers have 'major problems' with deposits

Friday, March 19th 2010

First-time buyers who are struggling financially are finding it difficult to get together the large deposit that many lenders are demanding.

This is the view of communications manager for the Council of Mortgage Lenders Bernard Clarke, who explains that this is becoming a "major problem".

In many cases, lenders demand 25 per cent of the property's cost for a deposit, "which is a very significant amount of money for a first-time buyer to acquire", Mr Clarke states.

Not only is this higher than in previous years, but in the past relatives would have been able to help out with such costs by drawing on their own home's equity.

However, given declining property values it is no longer possible for most of these relatives to do so, reveals Mr Clark.

Yesterday (March 18th) the National Housing Federation revealed results of a YouGov survey, which found that 86 per cent of 18-30 year-olds who currently do not own a home lack the financial means to do so.

Some 54 per cent said they would need their friends or family's help in order to make a purchase.