First-time buyer housing deposits soar in lockdown

Eighty-seven per cent of first-time buyers can now afford a housing deposit above £15,000, according to new findings from Trussle.

The online mortgage broker has reported the lockdown period in the UK has seen an increase in first-time buyer activity.

According to the research, first-time buyer applications have soared during the pandemic, with Trussle reporting a 185% increase in 2020. This strong demand has continued into 2021, with applications again increasing by 74%. The broker also highlighted the size of first-time buyer housing deposits, which have increased over the past year. In 2020, only 73% were able to afford a deposit greater than £15,000 but in 2021 this number increased to 87%.

Faced with limited spending options due to less commuting and the closure of hospitality and retail, Trussle suggested that many buyers have used the lockdown period to review their finances with the hopes of buying a new home.

Trussle head of mortgages, Miles Robinson, commented: “Despite the coronavirus pandemic bringing huge economic uncertainty, this hasn’t deterred would-be house hunters, and particularly first-time buyers.

“The market became virtually inaccessible for first-time buyers and those with smaller deposits, as lenders took a more cautious approach and restricted their criteria.

“However, some first-time buyers have been able to use this time to save more money towards their housing deposit, and this could explain why activity from this group has soared throughout the pandemic.”

Trussle’s research indicated that next-time buyers have also been spurred on by the stamp duty holiday, with applications from this group increasing by 93% year-on-year during 2020, and by a further 85% in 2021.

Similarly to first-time buyers, the broker also reported that next-time buyers have had greater deposit sizes in the last year. Trussle found that in 2019 only 51% had a deposit over £25,00 when moving home, but this grew to 67% in 2020 and increased further to 76% in 2021.

Despite the figures, Robinson added that the housing market should still “exercise some caution”.

“There’s evidence to suggest prices have been inflated due to the demand created by the stamp duty Holiday, which has led to bidding wars and a lower stock of available properties,” he added.

“Our data shows that the public have been incredibly responsible with their finances and it would be wise to continue with this approach until we reach a greater sense of certainty.”

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