The latest quarterly First Time Buyer Index from Aldermore has found that 67% of aspiring first time buyers feel that getting on the property ladder is difficult.
68% of self-employed first time buyers think that getting on the property ladder is difficult and 62% do not know how they will ever manage it.
For 32% raising the deposit is the biggest obstacle, while for 14% the biggest hurdle is just being able to secure a mortgage.
Indeed, 32% who have recently bought actually had to give up being self-employed in order to get a mortgage, while 12% currently trying to save for a deposit have had to take on a second job to earn extra money.
18% of first time buyers say they are under pressure from their family to buy, while a further 18% say they are feeling the pressure from their partner. In order to save for the deposit, first time buyers are also making a series of sacrifices. 30% have cut back on eating out, 23% have cut out holidays while 21% have been working longer hours.
When asked what could be done to improve the lot for first time buyers, the key request is to address rising house prices (46%). For 39%, an extension of the government’s Help to Buy schemes would be gratefully received whilst 30% just want to see the whole house buying process simplified. For 37% of those who are self-employed, introducing better mortgage products is key, as well as adapting the criteria for self-employed borrowers (33%).
For 35% of respondents, the main hurdle to getting the keys to their own home is raising a deposit, (slightly down from 39% in Q4 2016), and 26% of first time buyers will rely on their parents for help – this remains on a level with Q4 2016 (27%).
Concern around mortgage affordability (10%) has increased from Q4 last year (6%). Of those who have recently bought, the main problem experienced by 18% was saving enough for a deposit, while 10% found the whole process very difficult. The number of those who will be joining forces with their partner in order to fund their deposit has risen to 45% from 38% in the last quarter, meaning the number of people buying with their partner has also increased considerably from Q4 2016, from 45% to 64%.
Charles McDowell, Aldermore’s commercial director of mortgages, said: “First time buyers are the driving force of the property market but our Index reveals just how hard it is for them to get on the ladder, even more so for those who are self-employed.
“Low levels of confidence amongst these groups will have ramifications further up the housing chain so it’s imperative that more is done to support both segments of our society, paticularly with levels of self-employment continuing to rise in the UK.
“Raising a deposit is something that continues to be cited as the biggest hurdle by first time buyers, with a large proportion unable to do so without family help. With recent data showing house prices increasing by 2% in the month of February, there seems to be no let up for first time buyers who are having to stump up more savings up front. House prices are inevitably impacted by demand and supply and more needs to be done to address the latter.
“In the Housing White paper the government stated it will focus on delivering the right type of housing in the right places through a new assessment of housing needs, and this is something we fully support to better provide for first time buyers.
“Aldermore offers many products to help first time buyers who are struggling to gather a deposit, including the family guarantee mortgage and 95% mortgages for customers who have a smaller deposit. We always recommend customers to shop around to ensure they choose the best mortgage product for their needs.”
