First-time buyer boom ‘driving older borrower mortgage enquiries’

Mortgage advisers have seen a surge in enquiries from those aged over 55 looking for ways to help their children or grandchildren onto the property ladder, according to a new industry survey.

Retired homeowners are increasingly considering options such as cashing in buy-to-lets, acting as guarantors, remortgaging or taking out new mortgages, in addition to using their own savings or pensions funds, found the poll of 150 mortgage brokers, carried out by equity release advisory firm Key.

Mortgage brokers responding to the survey estimated that nearly half (47%) of first-time buyers were partially helped with their deposit by grandparents or parents, with only a third managing to go it alone without any financial support. This increasing use of the ‘bank of mum and dad’ meant that 60% of brokers also expected to see a rise in first-time buyer enquiries this year.

UK Finance data has shown that the average first-time buyer in London is aged 32 with a household income of £68,000, while in Scotland the average first-time buyer is 29 with an average household income of £35,000. Nationally, the average first-time buyer is 30 years old, buying a house with an LTV of 85% and a loan of £145,000, needing an average deposit of around £25,600.

But it is not just first-time buyers who are relying on the older generation – advisers estimated that a quarter of those moving to their next home were also being helped in part with their finances by parents or grandparents.

Key CEO Will Hale said: “With advisers foreseeing a surge in first-time buyer enquiries, it’s clear that the property wealth of the over-55s is increasingly playing an important role in tackling the inter-generational imbalance of property ownership. And it’s really no surprise, given the fact that the average first time buyer who wants to secure a good rate as they get onto the property ladder needs to find just over £25,000.

“That said, with the older generation often using their savings and pensions to help raise the deposit, there’s a real possibility for this generosity to have a sting in its tail,” he warned. “Getting specialist advice which considers all options, including equity release, is vitally important to ensure that they make decisions which will benefit themselves and their families over the long term.”

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