First time buyers accelerate deposit savings

Almost two fifths of prospective first time buyers are increasing the rate at which they save towards a deposit in 2009, according to new research from Abbey Savings.

38 per cent of those already saving towards a deposit said that they were looking to increase the rate at which they put their money away in 2009. Meanwhile, 40 per cent of those without any form of deposit stated that they had now decided to start saving this year.

With house prices looking increasingly affordable, those with a deposit said that they intended to try and save on average an extra £203 each month this year in order to get on to the property ladder, while those who were just beginning to save a deposit said that they intended to put away £123 on average each month.

When asked how much they believed they would need to save the average first time buyer stated that they were working towards building a deposit of £20,000, but there were substantial variations amongst the regions. Those in London said that they believed they would need £26,641 making them the region with the largest savings goal, while those in the Midlands believed they would need just £13,635.

Reza Attar-Zadeh, Director of Savings and Investments at Abbey, commented: "Homeownership is beginning to look like a much more realistic goal for thousands of first time buyers who have clearly been keeping an eye on house prices. Building a deposit is no small task, but those who have chosen to start putting extra money away are clearly better prepared to make an offer on a property when they see their opportunity. Savers need to be aware that a large deposit will make it easier for them to be accepted for the best mortgage deal. Abbey's First Home Saver has been specifically designed to help savers build up a reasonably size deposit, allowing you to put money away regularly up to a sum of £50,000"

First Home Saver (Special Issue 1)

Branch based regular savings account offering a variable rate of 5.50% gross p.a./AER (5% gross AER from 1 February)

Deposit of between £100 and £5000 is required to open the account and then a regular monthly deposit of between £100 and £300 by standing order. If you deposit less than £100 or more than £300 in a month, you will receive a variable rate of 0.10% for that month only. The maximum balance permitted is £50,000.

Withdrawals are not allowed on the account. You can access your money at any time but will need to close the account. On completion of saving/closure of the account saver must have a ‘no obligation' mortgage interview with an Abbey mortgage advisor. You therefore are not required to take out an Abbey mortgage at the end of the term. You can have the mortgage interview up to 90 days before you close the account.

To qualify for the account you need to be aged between 16 and 35, a non-homeowner and able to set up a regular standing order for between £100 and £300 each month.