First time buyer deposits to soar 57% by 2027

First time buyer deposits could see a huge soar in prices by the next decade, reaching heights of more than half of the current price, L&C Mortgages have warned.

The company has compared figures from the Office for National Statistics House Price Index showing how much a first-time buyer typically pays in each UK region as well as the average mortgage in each area to give an idea of the deposit required.

ONS figures show that first-time buyers pay £212,411 for an average property and typically borrow £160,591, meaning a deposit is £51,820, the broker said, and it claims that based on how much house prices have grown over the past 20 years it could reach 57% more at £81,468 by 2027.

On a regional basis, buyers in London currently pay on average £139,987 in deposits but could see this grow by 75% in 2027 to £244,842.

In contrast to the capitals giant hike of 75%, iamproperty’s hometown, although being one of the lowest increases, will still see deposit prices rising by an astonishing 46% from its current average deposit price of £ 26,037.

Furthermore, while only lagging by 5%, Belfast buyers could see the smallest increase at 41% to £41,755. While having the smallest increase across the UK, this does not reflect it’s total, holding a strong position as one of the most expensive deposits for 2027.

In addition to the research analysing the rise in deposits for a first time buyer, the report also looked at how buyers would fund purchases. From the results, the research indicated that 44% of first time buyers expect to finance their deposit through their own cash savings, with a further 15% using a Help to Buy Isa and 6% using a Lifetime ISA. A further 11% expected it to come from family members, and 6% will use an inheritance.

UK cities vs deposit needed graph


In reflection to 2017, on average first-time buyers are currently £16,436 towards their deposit, and predict it will take three years and eight months in total to raise the full amount – reflecting the unattainability of 2027’s predicted figures.

Almost a quarter said they hadn’t saved a penny towards a deposit.

David Hollingworth, a mortgage adviser at L&C, comments:

“There is some stark variation between cities, but the fact that London deposits could be almost hitting a quarter of a million pounds by 2027 is alarming.

“It makes sense for first-time buyers to try and raise as big a deposit as possible, but that is very much easier said than done in today’s current climate.

“Although there are mortgage deals available to as much as 95% of the property price, rates on these types of deals will be higher than for those who have saved a larger deposit.

“Given the level of commitment that first-time buyers are having to make, it’s of little surprise that they are often electing to fix their mortgage rate, so they know where they stand with their mortgage payments.”

While the rise in deposits are going to create a much larger gap for first time buyers to get onto the property ladder, one solution to tackle the rising prices may be through auctions. With prices being set through bidding, reaching an agreed point both the buyer and seller are happy with, this can lead to much lower housing prices and essentially even lower deposits.

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