According to new research from estate agents Purplebricks, 43% of today’s first-time buyers (FTBs) have fully funded their own deposit. While in 2016, just under a third of FTBs fully funded their deposits.
Although more FTBs are raising the money for their deposit without outside help, the Bank of Mum and Dad is by no means obsolete. The study shows 31% of FTBs are still getting help from their parents to buy their first home.
Another interesting trend revealed in Purplebricks’ study is the average deposit for FTBs has decreased. Now, new homeowners are planning to put down an average deposit of £29,943 which is a 10% decrease from £32,954 in 2016. A likely reason for FTBs buying houses with smaller deposits could be the government’s mortgage guarantee scheme. The new mortgage scheme allows FTBs to get onto the property ladder with just a 5% deposit.
Covid-19 caused mass disruption and uncertainty on a worldwide scale but it also presented an opportunity for people to save money. According to Bank of England statistics, many consumers increased their savings with the costs of socialising, holiday and commuting heavily reduced. The extra money being saved was used by FTBs to get onto the property ladder.
Lockdown savings did not completely diminish the Bank of Mum and Dad. In 2021, a third of parents are still getting their children onto the property ladder which is nearly the same as five years ago.
The impact of the pandemic on first-time buyers’ preferences
Apart from allowing FTBs to save more, lockdown also changed first house hunters habits in interesting ways. FTBs are opting for fixed-rate mortgages with 43% choosing this option.
The prevalence of working from home may have also changed FTBs priorities. Now, 68% of FTBs say they would consider living in a rural area which is a sharp rise from 57% five years ago. Working from home frees people from the daily commute and having to live in the city. The increase of working from home also means a good internet connection is important.
WiFi is now important to 41% of FTBs compared to 33% in 2016, meaning good WiFi is a bigger priority than proximity to schools and hospitality. Even though more people are working from home, 48% of FTBs still consider good transport links important an increase from 41% in 2016.
First-time buyers want new-build homes
A third of FTBs prefer new-build homes which is an increase from 2016 when they were sought by a quarter of FTBs. Those getting onto the property ladder are now seeking houses that are easier to maintain (41%) compared to 34% in 2016.
Susan Gregory, Purplebricks divisional sales director, said: “With lockdown limiting consumer spending, those saving to buy their first property have been able to put more aside and we are seeing many first-time buyers funding their deposits independently."