First time buyers rely on bank of mum and dad

A higher proportion of young buyers than ever before are getting help from parents to buy their first home, according to new estimates from the Council of Mortgage Lenders.

The newly released analysis suggests that around four out of five (80%) of first-time buyers aged under 30 are likely to be receiving help from parents. According to the CML, this is because they are unlikely to have been able to save a sufficient deposit themselves. However, the average first-time buyer deposit has remained unchanged after reaching a record 25% in February. The typical first-time buyer income multiple has also held at 2.97 from April.

Overall, home movers typically borrowed 67% of the value of the property in May, unchanged from April, and borrowed 2.68 times their income, up from 2.63 in April. The number of loans for house purchase edged up 4% from April, while remortgaging volumes saw a 9% fall from April and a 63% decline from a year earlier.

First-time buyer numbers were little changed with 14,000 loans worth £1.5 billion in May, compared with 13,700 loans worth £1.5 billion in April. There was a slightly larger increase in activity amongst home movers with 23,500 loans worth £3.3 billion, compared with 22,300 loans worth £3.1 billion in April.

CML economist Paul Samter said:

“Lending remains at very low levels, with the modest increase in house purchase activity off-set by a fall in remortgaging. The trend of tightening lending criteria seems to have subsided and we may see a modest easing in these measures over the summer, which will help some borrowers. But overall, access to mortgage finance will still be constrained by the diminished number of active lenders and shortage of funding available to them.”

“Meanwhile the Bank of Mum and Dad remains an apparently important source of help for young first time buyers. Some mortgage products specifically reflect this fact, and again we may begin to see more products that echo this phenomenon.”

If would like help working out which mortgage product represents the best deal for you, talk to TotallyMoney.com. Just head over to http://www.totallymoney.com/mortgages/ and enter your details to be put in touch with a mortgage expert who will produce a quote that is perfectly tailored to your needs.