Saving for a House Deposit Main Barrier to Home ownership

Even with the ongoing increase in high loan-to-value mortgage availability, British households still believe the main barrier to home ownership in the UK is saving enough money for a deposit.

This is the view of British households taken from the latest Genworth Index by global mortgage insurer, Genworth. The index report compares British consumers’ financial security and vulnerability with 19 countries across Europe and worldwide, whilst also assessing the impact of financial issues on the domestic mortgage and property markets.

It found that more than four in five (81%) British adults feel that saving a deposit remains the key obstacle to owning a home – particularly in a market where house prices are rising and real wage levels have stagnated. This figure rises to 83% for the key 25-34-year-old demographic group revealing deposit saving is a real concern for those most likely to be considering buying their first home.

With their ongoing ability to save compromised, many households now expect parents to help first-time buyers fund a deposit. 79% of all adults feel aspiring owners need to borrow money from their parents in order to put down a deposit on a first home – a figure which rises to 83% for the key 25-34 demographic.

Even 83% of households in the higher income bracket – those earning over £25k pa believe parents’ help is required possibly reflecting an increased ability to help or a heightened intention to do so. However, a separate study by Genworth among aspiring first-time buyers shows the reality that less than one in five (18%) can draw on parental help to raise a deposit.

British households also anticipate house prices are only going in one direction – up – with 72% braced for further increases in the next two years. Those in London (80%) and the South (78%) are much more likely to believe this compared to those in the Midlands (69%) and the North (62%).

Simon Crone, vice-president of mortgage insurance Europe at Genworth Financial, said:

“With the ongoing increase in house prices and incomes failing to keep pace, it is not surprising that the vast majority of British adults believe saving for a deposit remains the single biggest barrier to buying a property.

“Standard of living costs have also risen considerably in the past few years and saving continues to be difficult for many. With most British households anticipating that house prices are going to continue to rise while wage levels will not, the difficulties households face in saving for a deposit are not going to go away.

“Our index reveals a growing expectation from both children and parents themselves that they will be required to help ‘fill the gap’ when it comes to their offspring’s savings and the level of deposit required. The Bank of Mum and Dad is now an institution which is increasingly called upon and has become a permanent fixture of the British housing market – but with many households financially vulnerable, not everyone has the luxury of this parental support.”