According to recent statistics released by the Council of Mortgage Lenders (CML), the average first time buyer now needs approximately one year’s salary to put down as their initial deposit on a property purchase.
In early 2007, the typical FTB deposit was £12,700, which worked out around 37 percent of the average income (£34,388). In 2009 this had jumped to 95 percent of income at £31,500. By the first quarter of 2010, it was just over a year’s salary.
Last week, Housing Minister Grant Shapps chaired a summit to discuss the mortgage market and how lenders can help FTB’s onto the property ladder.
There have been many reports in the media on how mortgage lending has dropped by 13 percent in December and January in the UK, although the CML has stated this is still 5 percent higher than the same time period twelve months ago.
According to economist Peter Charles, recent statistics show there is a lack of growth impetus in the mortgage markets at the moment. The CML believes the mortgage market will remain constrained for the forthcoming few months due to the general slow-moving economy.
Following the credit crunch, it is unsurprising that banks and mortgage lenders are placing more emphasis upon lending to those deemed a lower credit risk. However, with several new 90 percent LTV (loan to value) mortgage products making an appearance on the market over the last few months there are now more openings appearing for those FTBs who can raise the deposit.