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Updated: 10 Jul 2019

First-time buyers saving bigger mortgage deposits for fewer properties

We reveal how much deposit you really need and advise on finding a property in a slow market

First-time buyers are typically saving an eye-watering £31,000 for a mortgage deposit, according to new figures from Experian.

The credit-scoring website says that this represents an increase of more than £3,000 in the past 12 months, showing the challenges people face when trying to buy their first property.

At the same time, the number of properties for sale has fallen, according to NAEA Property Mark.

Here, Which? looks at why the average first-time buyer deposit might have increased and explains how first-time buyers can get ahead in a slow-moving property market.

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How much deposit are first-time buyers really putting down?

Experian claims that the average first-time buyer deposit is currently £30,989 - a 12% increase on January 2018, when the average was £27,768.

The numbers should, however, be treated with caution as they're just based on people who've used Experian's mortgage eligibility tool, which allows potential homebuyers to check how likely they are to be approved for a mortgage.

The latest English Housing Survey found the average first-time buyer deposit had fallen by almost £4,000 in the financial year 2017/18 - but the average deposit cited by this survey was £44,635, significantly higher than the sum Experian reported.

Percentage-wise, Halifax claims that the average deposit put down by first-time buyers is 16% of the property price, although technically you can get a mortgage with a deposit of as little as 5%.

The lender has also told Which? the average cash sum paid in every UK local authority in 2018. You can find out what people are paying in your area in our guide to how much deposit you need.

Why might first-time buyers be saving more?

David Blake, from Which? Mortgage Advisers, says: 'In theory, there's no reason why a first-time buyer would need to save a bigger deposit now than, say, two years ago.

'The main reason for needing a bigger deposit is usually either house price increases or mortgage affordability issues.

'In many cases, lenders have tightened up on how much they lend, and if wages have also remained stable or decreased this could explain why larger deposits are required.

'The good news is, for those who are able to make things work, mortgages are really cheap compared to their historic pricing and so buyers should look towards longer-term fixed-rate mortgages.

'That said, there are many attractive variable-rate products on the market that allow people to keep their options open, which also appeal to many borrowers.'

Number of homes for sale tumbles

Separate research from NAEA Property Mark has found the number of properties available to buy per estate agent was at its lowest level in March for seven years, with just 37 per branch on average, compared to more than 50 in March 2016.

This could be due to the Brexit effect, with many sellers choosing to delay putting their homes on the market until we know whether the UK will leave the EU with a deal or not.

House-hunting tips

If you're keen to buy a property sooner rather than later and haven't found anything suitable in your area, these tips might help you get a step ahead of the competition.

Make friends with estate agents

You can improve your chances of finding a property by getting out there and chatting to estate agents.

Register in person in their branches, then call them regularly for updates. Establishing a good relationship with your local agents could mean you're the first person they call when a suitable property hits the market.

Don't restrict yourself to just one estate agent; register with any that are selling the type of home you want to buy in the areas you want to buy in.

In the video below, estate agents explain how you can be the first person they call when a new property is put up for sale.

Leaflet in your desired area

If you want to buy a home in a particular area but nothing is coming up for sale, try leafleting in your desired streets to let people know you're keen to buy.

You should include your contact details and the type of property you're interested in.

Selling this way could appeal to some homeowners as it means they can avoid paying estate agents fees, while the upside for you is that you'd have first dibs on a property other buyers didn't even know was for sale.

The potential disadvantage is that if the homeowners haven't proactively put their house up for sale themselves, they may be less motivated to sell which could lead to disappointment further down the line if they accept an offer but then have a change of heart.

First-time buyer schemes

If you'd like to buy a home but are struggling to save up a big-enough deposit, you could consider the following options:

  • Help to Buy equity loans: if you've got a 5% deposit, the government may lend you 15-40% of the property price (depending on where you live) through aHelp to Buy equity loan, but these are only available on new-build homes.
  • Shared ownership: this allows you to buy between 25% and 75% of the property and pay rent on the remaining share.
  • Buying with a friend:increasing numbers of first-time buyers are teaming up with friends in order to cut the costs of a deposit, buying fees and mortgage repayments.

Find out more:the process of buying a house