First time buyers keep spending deposit

First time buyers are struggling to raise the deposit for their first home because they can’t stop spending it according to mortgage provider Abbey. The bank’s research shows that of the potential first-time buyers currently saving for a deposit a massive 11.2 million of them have admitted ‘dipping in’ to their accounts.

Indeed, one in ten (11.2 per cent) of those people who are saving a deposit for their first home admit to going ‘deposit dipping’ almost every month, while nearly one in five (19.5 per cent) admit taking out funds every couple of months. Worse still are the 888,000 people who claim they use money destined for their deposit every week.

Ricky Okey, Managing Director, Abbey for Intermediaries said: “As surprising as the research is, it does go a long way to explaining why so many people are finding it hard to get onto the property ladder, and why of the first time buyers we spoke to we found that there is a strong demand for our 100 per cent mortgage, as many have not been able to save a deposit large enough”.

Abbey Mortgages has recently launched a 100 per cent mortgage that has a maximum loan size of £500,000 and requires no deposit.

Recent Council of Mortgage Lenders (CML) research also backs this up. In their "FTBs - the decision to buy" report, July 2005, it confirmed that many first time buyers said 100 per cent mortgages were the only way they could afford a mortgage on the property they wanted.