Deposits biggest barrier to aspirant homeowners

Raising a deposit has been identified by building societies as the most significant barrier to first time home buyers in a survey by the Building Societies Association (BSA).

The survey is part of “Stepping up to the Mark”, a major new report published today by the Association which looks at what building societies are doing to help people buy a home. The survey found societies believe the main barriers are:-

Raising a deposit
Making monthly mortgage repayments
Stamp duty
Legal, valuation and other official costs

Commenting on the findings of the research, Adrian Coles, Director-General of the BSA said: “It is no surprise that with the average house price being almost £220,000 (CLG figures), raising a deposit is such a barrier for first time buyers. Even a 10% deposit necessitates saving over £20,000, a sum out of reach of many potential buyers who have no existing housing equity.

“With societies being anxious to help people onto the housing ladder, it is no surprise that many make 100% loans available to buyers who can afford the repayments on such a mortgage, allowing them to circumvent the need for a deposit.

“But these are not the only products that societies offer. Our research has demonstrated the wide range of mortgages that societies provide to first time buyers, reflecting both the diversity of the building society sector and their enthusiasm for responsibly helping first time buyers.”

Mr Coles also commented on the Government schemes saying that “The existing Government schemes designed to help aspirant first time buyers fail to recognise that it is the deposit that is the problem rather than the monthly mortgage repayment. With rents being so high in many areas, buyers find that their monthly housing costs are often no higher than their previous monthly rental payments.”