First time buyers urged to invest mortgage deposits wisely

Over 1 million first time buyers have decided to put their property ownership ambitions on ice for at least the next twelve months, according to new research from Abbey Mortgages. That accounts for 67 per cent of all first time buyers.

And with a collective £31 billion's worth of deposits amassed between them Abbey says that investing the money wisely over the next 12 months could make them an extra £2 million in interest.

While housing prices now only growing by 1.1 per cent annually, the average interest rate paid on high interest accounts is 6.5%. So shifting money into a high interest account could help make those deposits grow faster than house prices, and leave first time buyers in a stronger position next year. Indeed investing the average deposit of £28,000, would generate around £1,820 in interest over the course of the year.

Phil Cliff, Abbey Mortgage Director, commented: "Those delaying purchasing a home would benefit greatly from moving their deposits into high interest saving accounts like Abbey's eSaver Direct which now offers a market leading 6.5 per cent interest rate."
Previous research from Abbey reveals that 74 per cent of first time buyers claim that speculation about house prices and economic uncertainty has dampened their enthusiasm. Of these, 69 per cent fear that house prices will fall, whilst 67 per cent feel that their finances are already too stretched. Others are worried they might lose their job. 624,000 first time buyers are, however, still planning to invest in their first home in the next 12 months.