Average deposit required to buy a home now 10 times bigger than 20 years ago
Deposits soar since 1990
September 25, 2012
Since 1990 the average deposit required to buy a home has increased from £6,793 to £65,924. This breathtaking rise has been during a period when average incomes have only increased by two and a half times. These figures, released by mortgage provider First Direct, provide a stark reminder of how deep the housing crisis has become. Mortgages are on average worth 6 times the buyer’s salary, double what experts claim is sustainable.
The reason for this enormous surge in the amount required to secure a home is a combination of rising house prices and a tightening of lending criteria since the financial crisis began. Soaring house prices were for years negated by increasingly loose lending by banks such as the now infamous 125% loans offered by Northern Rock. Once those cavalier days were over requirements for large deposits became the norm.
“Much has been made of rising house prices, but the average deposit needed in the first place has actually risen more than twice as fast as house prices and almost four times as fast as income,” said Bruno Genovese of First Direct. “This is why we are seeing first time buyers getting older, with more and more people struggling to get on the property ladder.”