More than a quarter of aspiring first-time buyers are so desperate to raise a deposit that they will take out an unsecured loan.
Research by Santander, out this morning, says that 27% will take on extra debt to raise the money for a deposit. Almost the same proportion (28%) are also taking up second jobs or working overtime to find the money.
However, the research also reveals that while one in four current non home owners are hoping to buy for the first time within five years, one-third say they will never own a home.
The average deposit for a first-time buyer is now £37,375 – or an average of 17% of the overall property value, says Santander.
The figures are a stark contrast to data obtained from current home owners, who bought their properties on average 12.5 years ago.
Then, just 5% relied on overtime or a second job, and only 4% took out a loan to raise their deposits.
Savings (54%) are, as then, the most popular way of funding a deposit, but whereas it used to take 29 months to save for a deposit, it now takes 40 months.
Another change is the proportion of potential buyers relying on inheritance money. This has almost doubled in the last 12.5 years, moving from 8% to 14%.
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Comments
More housing stock is needed drastically if we are to stop a mass exodus of Britain’s highly skilled young professionals from leaving the UK.
As a Cardiff letting agent we see it first-hand how difficult it is for young people to fly the nest and stand on their own two feet. They are in an awful situation where they require a substantial deposit to become a home owner and with ever increasing rents they are finding it almost impossible to rent and save a deposit.
With the average Cardiff rent at over £900 per calendar month, just to move into a rented property a prospective tenant will need to have a bond equating to 1 months’ rent, pay a month’s rent in advance plus agent’s fees and pay for furnishings as well.
Brit1234:
"As for this article I am planning to start up a second job next week. This isn't for extra cash for a house but to get skills instead."
According to your previous posts you are clearly earning well in excess of the National average as a BASIC wage, if ALL of your overtime is taxed at 40%.
Why then, take YET another job? Surely someone that needs it FAR more than you do should be given the opportunity?
And if you are already piling in what I believe to be 225 ACTUAL hours of overtime in a month, how the hell do you expect to squeeze in more?
You certainly won't be giving it 'heart and soul' - will you?
Richard, I think I know who you are and I will ignore you from now on. If you can't understand my former post you are a simpleton.
As for this article I am planning to start up a second job next week. This isn't for extra cash for a house but to get skills instead.
Brit 123 err mummy what next is it 4? Can you post in English your last one made no sence but then you dont ever so don't bother!
By the way I am not an estate agent but I have actually got a job and pay tax. Your OT answer was pure crap and you know you made yourself a complete pillock.. Change your name to pillock, save us rwDING YOUR RUBBISH.
Heres some help for your little brain... its 1,2,3,4 then comes 5, then 6 , then 7.
By the way who added the spam filter up for you? I will expect your stupid repsonce after school,
RE Richard "Foolish? - 300 hours OT this month is circa 25 a day, thats clever!! but very foolish if your job still pays you for all that and you still pay just 40% tax. No wonder you suck up benefits mate.
Yep foolish you are indeed."
Thats working every day that month between 12-18 hour days. Working on all days off at 1.5 or double hourly rate.
I don't know where you get this benefit thing from, the closest I have got to benefits was a student grant at uni.
Personally I think you are either a wined up merchant or a simpleton. I favour the later.
I hope you are not representative of all estate agents.
@Turnip
I hope with all my estate agency filled heart that you were being sarcastic.
I would rather die at 70 and earn £7 an hour than sponge off the state and live a souless existence for ever, as would most people I hope.
And if the youth of today have to work a bit harder and save longer then so be it - we all had to do it back in our day! its all pro rata isnt it ?
I for one am very proud of those kids who work harder and save longer to achieve their goals, actually you dont hear them moaning about it, they just knuckle down and achieve their dreams. Its the low life scroungers that are always moaning, and those are the people sucking the life out of our country, not the hard working immigrants who do the jobs that our 'scroungers' are too lazy to do.
I for one appreciate my Iraqi car wash team. You watch them, they work tirelessly for hours and hours and hours for very little - I bet you wouldnt see British youngsters doing such hard work for such little pay - well why would they when they get to live in cosy council houses with everything paid for ?????
Sorry - I've got to go. Hurt my leg falling off the giant soap box I was standing on!
I know I'm an old fart but where is the news in this story? As an EA who happily sailed through the heady days of tthe late 1980's I was then brought back down to earth in the early 1990's and had to take on a second job in order to ensure I had enough money to live on. At the risk of sounding older and fartier I didn't have spare money and it was tough. I wasnt alone and several agency friends took on extra jobs including one who became a minicab driver (in his company Ford Escort). Unfortunately one evening by a horrible coincidence he collected his area director as a fare! (He kept his job but gave up minicabbing)
“They could quite easily sit on their back side and say "prices too high - mwah" thinking the world owes them something and not do anything about to help themselves. “
If you want to talk about ’thinking the world owes them something’ why I am not surprised you turned it around so its on the buyers, and not the vendors. The same vendors who think the world owes them bubble prices at the early stages of a depression for their house that they themselves paid significantly less for.
EA logic:
HPC crowd: welfare benefit scroungers / children / trying to get something for nothing / morons for expecting house prices to connect to deposable income
All home owners: Honest upright decent citizens / unknown to the concept of greed / worth every penny they can think of and slap on the asking price / sound as a pound for expecting bubble prices regardless of economic conditions.
When I lived in Germany Pee Bee, the Mrs and I were both taught German by Polish people!
"Personally, I think the headline used here is not an accurate enough reflection of what the article goes on to say."
Is it ever, rant?
Never stops those whose agenda it suits from quoting it, though... :o|
rant: "If East Europeans are settling over here in large numbers, I reckon they'd do better relocating to Germany now that the barriers to work have been removed there. The job environment is better, the housing costs are cheaper, East Europeans are likely to speak the language and they can drive rather than fly back home to visit relatives"
It ain't that straightforward though, is it? People might just WANT to come here to work and eventually settle. Let's face it - we don't 'alf look after them...
As far as 'speaka da language' (royalties due to Men At Work for the use of their lyric...) goes, that is not necessarily true, as is it not the case that in the vast majority of euro countries English is taught as the second language, even if, say, Germany, is just across the border?
Which reminds me of the urban myth where a Lufthansa pilot is sitting in his cockpit on the apron at Hamburg Airport, and strikes up a conversation over the radio with a BA pilot. "Tell me", he says, in typical 'Allo'Allo German accent, "vhy iz it zat ve are sitting in German-built aeroplanes, in a German Airport... und yet ve hef to speak to ze German Air Traffic Controller, in Eengleesh?"
British Airways pilot says " Simple, my dear chap. WE won BOTH f****** Wars..."
Wonder if the pilot was Jonnie's Grandad...? ;o)
I'm just looking beyond the article's headline. It says that the same number of people are taking on extra debt to get a deposit together as are taking on second jobs, does it not? What would the discussion on the article be like if the heading had been More first-time buyers turn to extra debt to raise deposits.
The second part of the article then focuses on the challenges of getting a deposit together now compared to just over a decade ago.
Personally, I think the headline used here is not an accurate enough reflection of what the article goes on to say.
Rant, sometimes you do miss the point a bit, confusing things with your own opinions of how things 'should be' as to what they currently are.
Jonnie and Jonnie Sr are absolutely spot on. It's great to see the youth working harder for something that they need more money for. I have several friends who have bought flash cars on HP. They live at home still.
Whether prices are too high, too low or completely random, is a separate issue....the youth in question realise that THEY specifically need more money for their target, so they are working for it.
They are doing what they can to turn their current ACTUAL situation to a more favourable position for themselves - that's truly brilliant.
They could quite easily sit on their back side and say "prices too high - mwah" thinking the world owes them something and not do anything about to help themselves.
Good on them.
If East Europeans are settling over here in large numbers, I reckon they'd do better relocating to Germany now that the barriers to work have been removed there. The job environment is better, the housing costs are cheaper, East Europeans are likely to speak the language and they can drive rather than fly back home to visit relatives. It's not like we've got better infrastructure, schools or weather either.
@rant,
………….of course many eastern Europeans are now settled here, having families, working up the career ladder, buying houses……….come on mate, modern chap like you doesn’t believe they all live 12 to a house and work in the car wash / hotels do you?
Jonnie
I don't see why British youth are currently getting such a hard time in the media. I mean given the choice of:
A. Knock up your missus and be given everything you need for the rest of your life no questions asked. Sell a bit of weed on the side, do a spot of fishing, read your way through the library and have a very casual life.
OR
B. Work like a dog for 7 quid an hour, retire at 70, die.
Isn't option A the sensible and intelligent choice?
Foolish? - 300 hours OT this month is circa 25 a day, thats clever!! but very foolish if your job still pays you for all that and you still pay just 40% tax. No wonder you suck up benefits mate.
Yep foolish you are indeed.
Rantrave - I agree, slash benefits drastically, make our lot work.
What's the young Lithuanian working towards though vs the young Brit? A few years in the UK, sleeping three to a room and living off 'toast sandwiches', the East European lot can return home and put a deposit down on a reasonable house.
The same British person would after five years of the same be nowhere near as close to buying a house in this country. When house prices increase significantly faster than salaries (as happened during most of the last decade), it undermines the incentive to work. A life on benefits will mean you are unlikely to own your home. Working hard at the type of jobs that the UK is currently offering young people is also unlikely to lead to you owning your own home. Throw in the rising cost of transport too and hard work at a basic job doesn't offer too many rewards over the benefits lifestyle.
(note, I am not advocating a life on benefits, just suggesting that work has to be seen to be significantly more advantageous than it currently does to many young Brits)
There is a lot of 'short termism' on here at the moment.
Most of the comments about my last post still miss my point.
Rent if you want to - you will have to rent if you don't buy.
However, looking ahead if one buys what one would really like to live in (nesting) for a minimum period of say 5-10 years as apposed to just 'investiing' there probably (even if the 'doommongers' are right for the first part of that time), there won't be a lot in the total costs at the end?.
@Rant
Not sure, never discussed it with him, although he also hated Germans so his opinions were a bit out of date.
Agree with you on youth unemployment, but the Radio 5 phone in was interesting yesterday, lots of bright young things with a bit of oomph behind them calling to say they had been successful and lots of potential employers phoning in to say the standard of many youngsters was appalling.
Has the young of today just become a worse proposition to an employer than a hard working Lithuanian? Possibly so, and my grandfather would have agreed with that.
Jonnie
RE Richard "Brit 123are you paying your own rent or us, that actually pay tax paying it for you I suspect?"
Richard I suspect I pay a little more tax than you. Infact I have 300 hours overtime this month being taxed at 40%. I also pay my own rent.
You can try to dismiss my argument by calling me a benefit scrounger for some unknown reason however all it does is make you look extremely foolish.
House prices are overvalued extremely on a historical basis, the economic situation is not strong enough to support these inflated prices. Infact the economic situation is about to get far worse as more hidden bank debt resurfaces. Nothing has been fixed these 4 years, all what has happened is the can keeps getting kicked down the road.
Lower prices = More transactions
Would your grandfather have agreed with the same amount of people taking on extra debt to get a deposit together?
This story also seems at odds with yesterday's news about record youth unemployment.
This is more like it!
The young actually choosing to be more productive and graft a bit to get what they want……………the penny is / has dropped for some then, they want to own a house so they earn more to buy it.
Jolly good, my grandfather would have agreed with that.
Jonnie
Times up- Try that post in English mate so we can work out what silly point you are trying to make??? Is English your second language?
and Dick is a well used nickname for Richard, like Bob for Robert or silly pillock for you. ( Cleaned that up!)
Dick, typical EA comment to a HPC’er. Implying they are a welfare scrounger. For your information the other one some of your simplistic colleagues like is to imply that HPC’ers watch Cbeebies.
The inconvenient truth for you is that the property bubble is largely a generational thing, if you are in your late 30’s you probably own a house. If you are in late 20’s or early 30’, you might just own a house, but your hoisted with heavy debt levels, and if your anything below that without wealthy parents you have no chance. However, within those groups your find the full range of careers, professionals, self employed manual works. Your lazy attempts to brand non-house owners as untermenschen might make you very excited and pleased with your own wit, but has little bearing on reality.
I have to wonder, after these people have extended themselves to this insane degree to buy these properties, who on god’s green earth do they expect to be the greater fool and buy them off them for these prices.
London is going to experience heavy falls as the banks are right now announcing major job losses in the city with tens of thousands of jobs to go by the time the effects ripple out across the financial sector. First time buyers are getting rarer as a whole generation or more in priced out. Those million unemployed youths in the news right now, do we seriously expect them to be all earning over £30k a year (in real terms) in five or six years time and able to raise £40k deposits and take on a 5 times salary lone to buy a two bed semi?
Truly the people buying now are the greatest fools, and once they have extended themselves to this insane degree to buy a house there will be no one left in future years to buy it off them at anything like what they paid. Assuming they manage to survive working two jobs for years on end, and assuming interest rates don’t rise (which they will have to) these people will nonetheless be trapped in negative equity.
I love this site, get real, none of you key board wan*ers can either talk this market up or down, be happy playing copying and posting by all means but please don't delude yourselves, you make no difference at all, even if you are a legend in your own minds.
Brit 123are you paying your own rent or us, that actually pay tax paying it for you I suspect?
@ Ray Evans
Ray I rarely disagree with what you say especially when it is based as far as it can be in estate agency on fact, buit to suggest that not talking the market down is the same as being muted when talking it up is disingenuous to say the least.
An estate agent's job is indeed to sell, and at best possible price. But not to try and tslk the market up to that "price".
One of the major problems in my view with the state of the UK Housing Market - and has been for years - is the inability of anyone closely linked to it to talk sense and, above all, honesty. Why? Because there are so many vested interests.
Not talking the market down is exactly the same as hoping that keeping schtum will talk it up. How disingenuous is that?
And you all wonder why, notwithstanding the current strong efforts of politicians and journalists, not to mention bankers, estate agents continue to be held in such low esteem by Joe Public?
It is because of their inability to say how it really is and how it is going to be rather that how they wish it was or where they'd like to see it is.
Ray some of us want the market to be talked down. Saying constantly to the public the dead parrot is alive each day just puts off the editable that they will eventually find the truth.
There are loads of buyers out there with deposits but they are not going to commit when they can see prices falling but sellers being told by EAs that their property is worth more than it actually is.
We need reality out there and transactions will pick up.
Yet another month coming up where I am not going to bother looking and just add even more to my deposit.
@Hants EA
Hello,
I take your point but you have misread mine.
I have not said 'talk the market up' only to just stop talking it down!
You say: Your feeling Is ......generally the public have grown used to the idea that the market will not be "picking up" for many years to come......Well of course they will, to keep hearing doom & gloom it becomes more self-fullfilling.
Of course the market is what the market is at the moment, it will not always be so. Just do the best to sell, be honest, but stop the constant negativity - in my view it is very poor salesmanship.
http://www.money.co.uk/mortgages/95-mortgages.htm
make your choice, throw money at rent and own nothing, or get a mortgage and throw it at that. Take your choice but don't stuff it down everyone elses throat!
@Ray
But you don't sell much if you treat people like idiots. It is obvious to every man and his dog that the market is not currently in the best of health. I find that it is best to be upfront about this and certainly wouldn't class it as talking the market down.
The market is what the market is. I stay in business by making an assessment of where that is at any given time and grabbing more than my fair share of the stuff is selling.
My feeling is that generally the public have grown used to the idea that the market will not be "picking up" for many years to come. I suspect that if I started talking up the market, they'd think I was nuts (at best) or a spiv and I'd go out of business much sooner.
athina
Good luck in your search for an interesting Estate Agent.
They are very few and far between... ;oP
(only kidding, you lot!)
Hi everyone,
I am an estate agent and I have good news for you. If someone wants to buy property around Blackpool, Preston area, you don't need a large deposit (5%-10%) and you don't need mortgage(AT ALL).
Email me if you are interesting.
Ray,
No probs there then, I heard there are plenty of Eskimos who need fridges in Alaska, plenty of new jobs in a new industry for those who cant make EA pay
If any of you who are talking the market down and therefor your sales, are estate agents, I doubt you will be around for much longer. Rght or wrong your job is to sell.
Taking a larger sample size than Jack, the most recent CML figures show that only around (I say around because this is from memory) 1% of mortgages last month were at 95% LTV. Around 5% were 90% LTV.
Mortgage famine = Falling prices. We all know this and have done for years.
Lending goes crazy bubble inflates. Lending goes cautious bubble deflates.
Jack Sendant: "i run an independent estate agent and 45% of sales last month came from first time buyers. the average deposit size was 15%, and several were only 5 or 10%. the reality is, if the buyer has a good credit history, and about £10-15k saved up, then can get onto the property ladder. we are finding lenders have an appetite for these sorts of buyers."
How big was your sample? 45% of 3 sales - 10 sales?
Where in the country are you? Where I live 10k saved up would not be a lot of use.
There are quite a few 90% LTV mortgages to choose from, HSBC, NatWest, Santander, Halifax, Post Office with rates ranging from 4.09% to 5.39% (some with hefty fees mind you).
Lloyds TSB offer a 95% mortgage at fixed at 3.94% until January 2015. Oh, but there's a catch......
"Lloyds TSB are offering this Lend a Hand product exclusive for first time and next time buyers. Buyers need a 5% deposit along with a helper who is prepared to offer another 20% of the property value (to be held in a special Lend a Hand savings account and on which they will earn 3.70% interest) as additional security for the mortgage."
@Chris Clarke
"I'm old and have kids at home of house buying age, I'm an agent and I am telling them both to hold on and save their money"
....................................'nuff said - I cant quite see why I should gift a deposit to see it sucked down the drain either, everyone can see the market is falling its just not that fast and obvious but it is happening.
I'm quite old and remember the days of the "top-up" loan.
Having a second mortgage to pay the balance of the deposit is nothing new...
Interest rates on mortgages are low, but high compare to the BoE base rate - so they APPEAR to be high.
The problem is that it is becoming more and more likely that prices/ values will drop over the next 3-5 years.
Why buy a flat today for £100k when I can wait a bit (stay with mum & dad or rent - either doesn't matter) and buy the same thing for £70k in a bit.
Seems like a plan to me.
As I said at the beginning, I'm old and have kids at home of house buying age, I'm an agent and I am telling them both to hold on and save their money (I love them dearly, but they really get in the way of those swinging parties...)
Sorry meant o add
1. I wonder at what level of interest rate for these low deposit loans?
2. I hope these second jobbers realise that they'll have to keep the second job on to afford the loan and not just the deposit and realise the impact this will have on them socailly if single and domestically if married. I have a family relation currently on three jobs to make ends meet and it is tearing their relationship apart.
I want a mortgage is right to ask. There will always be a very small amount of funding for very special schemes, purposes, clients, mortgage introducers and so on.
Having said that I find a figure of 45% staggering. Although statistically it is what is needed to support a moving market I find the figure at the moment staggering.
In general the credit history has no impoact. If it is adverse then it means rejection of course. If it is good then it is just one box ticked in a long list that have to be crossed off successfully to get anywhere near an application - and there has been plenty of comment on how many applications then fail at a later stage for all sorts of reasons.
95% loans are as rare as hen's teeth at the moment and will be for a long time. Sure there will be a few for the very lucky with exceptional connections.
But did no-one see the item in EAT or LAT last week, it weas the very last one and I think commented basically on lloyds I think it was and their lending levels - or lack of them - and commented how banks are cherry picking and preferring to increase their own deposit base etc.
Or have to.
I wish these loans were more readily available Jack you are indeed a lucky lad I should keep your sources to yourself!!!
@ jack sendant perhaps you coulds name the lenders??
i run an independent estate agent and 45% of sales last month came from first time buyers. the average deposit size was 15%, and several were only 5 or 10%. the reality is, if the buyer has a good credit history, and about £10-15k saved up, then can get onto the property ladder. we are finding lenders have an appetite for these sorts of buyers.