First-time buyers need £32,000 deposits

Research by the finance website moneysupermarket shows the average first-time buyer needs a deposit of £32,000.

The website says that the number of mortgage deals available has plummeted 60% over the past 12 months, and deposits of 25% or more are required on many deals.

Not surprisingly, only 13% of 18 to 34-year-olds are planning to make their first house purchase within the next year.

The research also shows that 16% of first-time buyers are considering taking out a loan to cover the cost of the deposit.

Louise Cuming, head of mortgages at moneysupermarket, said: “Taking out a loan to pay for a mortgage deposit is a dangerous move, and must be avoided even if it means you have to delay buying your first home.

“Anyone who takes a loan is effectively taking out a 100% mortgage through the back door. Not only will the mortgage lender decline the application if it discovers this is the source of the deposit, but it is also a huge risk to the borrower.

“It’s easy to see why only 13% of under 34-year-olds are planning to get on to the housing ladder at the moment. The need for such a high deposit is pricing many people out of the market.”