Deposits reach post-recession high
Average deposits reached their highest point since the recession in May, as house prices continue to rise, according to our National Mortgage Index.
Data shows that the average house purchase deposit reached £72,302 last month - the highest figure since Mortgage Advice Bureau began recording this in March 2009, surpassing the previous peak of £71,474 from June 2014.
Rising house prices are requiring consumers to take on bigger loans, but MAB’s analysis shows they are also putting up more of their own funds to climb the property ladder.
Recent house price growth also means that many home-movers are likely to have made significant equity gains in recent years, which will help to fund larger deposits for their next house purchase.
However, for first-time buyers, the rise of average deposits is more concerning, as they are faced with needing to raise increasingly large sums to get their foot on the property ladder.
Brian Murphy, head of lending at Mortgage Advice Bureau, comments:
“Measures introduced to the mortgage market since the recession mean there are multiple checks and balances to ensure that people do not borrow beyond their means.
Thanks to recovering houses prices, many existing homeowners have extra equity in their properties and can balance their borrowing commitments with a significant stake of their own.
“Putting up a 30% deposit helps to unlock some of the best rates on the market and helps keep mortgage payments even more affordable.
"The rise of deposits is less encouraging for first time buyers, but there is at least some hope that more low cost properties will become available as second- and third-steppers make their move up the ladder.
“The range of affordable schemes to support first time buyers will soon be boosted by the arrival of the Help to Buy ISA. All the same, the savings scheme will not be enough on its own to solve the long term issues that are driving up prices and deposits across the market.”