Two-thirds of first-time buyers are still relying on handouts from their parents in order to get a foothold on the property ladder, according to the latest figures from the Council of Mortgage Lenders (CML).
CML data shows that 66% of first-time buyers who bought a property in recent years did so with the help of the ‘Bank of Mum and Dad’, as high deposits demands from lenders and spiralling property prices make it increasingly difficult for the younger generation to secure their first home.
The situation is even worse in the capital, with 72% of Londoners needing a financial leg up from their parents. This comes as no surprise as average price of a property in London (£364,000) is more than twice the national average (£163,000).
The average profile of a typical first-time buyer, according to the CML, is a 29-year-old with a total household income of £34,000 who puts down a 20% deposit – with parental help.
In London they are typically 31, have a total household income of £50,000 and put down a 25% deposit – also with help from their parents.
Housing minister Mark Prisk has said it ‘cannot be right’ that so many young people are unable to fulfil their dream of home ownership.
Mark Harris, chief executive of mortgage broker SPF Private Clients, argued that there is hope for first-time buyers, outlining that as the government’s Funding for Lending Scheme gains momentum banks will continue to step up the competition by attracting borrowers with lower deposits.
He said: “As lenders saturate the low loan-to-value (LTV) market with a plethora of rock-bottom rates, they will be forced to turn to the higher LTV bracket if they are going to do any significant levels of business, which will mean cheaper rates and more choice for first-time buyers in particular.”