8% of first time buyers now rely on the ‘Bank of Gran and Grandad’ for their deposit, a four-fold increase compared to those who bought their home five years ago (2%), Santander Mortgages has revealed.
Over the past five years there has been a large shift towards turning to family for help in order to get a foot on the property ladder. Of those currently looking to buy, 32% will use a family loan to help with the deposit, a sharp increase from the 13% of current homeowners who asked for financial help from their families.
The bank’s study, which took a snapshot of first-time buyer attitudes towards the property market, revealed that first-time buyers estimate their deposit will be, on average, 32% of their salary. However, 19% expect to pay more than half of their annual income on their deposit.
In comparison, current homeowners estimated that when they bought their first home, their deposit was an average of 20% of their yearly income, with only 5% of them spending more than half of their salary on a deposit.
The research also reveals a sizeable imbalance when it comes to home deposits and gender. 23% of women expect to spend more than half of their annual salary on their deposit. This compares to just 14% of men who expect to spend the same proportion of their salary.
Despite the extra help from family members, first-time buyers saving for a deposit expect to do so for an average of five years. A whole year longer than those who bought their first property five years ago, who saved for an average of four years. This difference is likely due to the much higher proportion of those who say the cost of everyday living expenses eats into the amount of money that could otherwise be saved (40% of current first time buyers’ versus 18% of those who bought five years ago).
Despite these steep increases, first-time buyers appear optimistic about the property market with 10 million UK adults planning to buy their first home in the next five years. Indeed, 45% of those looking to buy are more positive now than they were a year ago, compared to just 20% whose confidence had declined.
The research also shows the health of the UK economy has had little effect on those planning to buy, with 44% saying that while they are concerned, they will go ahead with their purchase regardless, and 39% claiming that economic factors will not affect their decision to buy at all.
Miguel Sard, managing director of mortgages at Santander UK, said: “Despite having to use alternative income streams over and above their salary – such as relying on the Bank of Gran and Grandad – today’s first time buyers are demonstrating resilience and determination to achieve their home ownership goals. The purchase of a first property still remains high on the priority list for many people across the UK and it’s encouraging to see so many first time buyers feeling positive about the year ahead.
“We know many people like to shop around for the best deals online and it should be no different when looking for a mortgage. With our online mortgage application we are making things as easy as possible for our customers, helping them find the deal best to meet their needs, at a time and place that suits them.”