First-time buyer deposits rise by 41% over last decade

The average costs of a mortgage deposit for first-time buyers has risen by 41% over the last 10 years, according to data from estate and lettings agent Barrows and Forrester.

This means that prospective homeowners now need over £10,000 more to obtain a house, pushing many people out of the market altogether.

Barrows and Forrester analysed the current cost of a deposit, based on 15% of the current first-time buyer house price, and tracked how prices have changed since 2012.

In 2012, the average house price for a first-time buyer was £141,572, with a 15% mortgage deposit of £21,236 or £24,660 when adjusted for inflation.

Now, however, prices have jumped to £231,917, with average deposits now reaching £34,787, a £10,127 or 41% increase over the decade.

Managing Director of Barrows and Forrester, James Forrester, commented: ‘The outlook is currently a very bleak one for those yet to secure that first foot on the property ladder. House prices have soared over the last 10 years, let alone during the pandemic, and so the initial financial hurdle of a mortgage deposit is far, far higher than it was in 2012.

‘At the same time, earnings have failed to keep pace, with a sustained period of record low interest rates also making the task of saving a deposit extremely difficult.

‘While our savings may now accumulate a greater level of interest with the base rate increasing, the downside is the cost of securing and repaying a mortgage is also starting to climb considerably.

‘So even those that are able to make it to that first rung of the ladder will now find their household income stretched even further due to higher mortgage rates.’

The East of England has experienced prices rise by the greatest margin, with first-time buyer deposits 51% higher than they were a decade ago, blocking many in the region from homeownership.

London and the East Midland both ranked second with a 47% increase, but the capital accounts for some of the largest increases at a local authority level.

Costs of the average first-time buyer mortgage deposit climbed by 79% in Waltham Forest, while Barking and Dagenham have seen a 77% rise and Thanet saw the largest jump outside of London at 73%.

Scotland is the only area in which mortgage despots have decreased in the last ten years, with Aberdeen seeing a decline of 25%, Aberdeen a decrease of 3% and Inverclyde of 2%.

Photo by Egor Myznik