A new report by the Building Societies Association has shone a light on the challenges facing buyers when it comes to deposits and mortgage affordability.
If you're thinking of buying your first home this year, it might sound like it's all doom and gloom. But we're here to help. Read on to learn about the practical steps you can take to overcome the biggest struggles first-time buyers face.
First-time buyers face worst conditions in 70 years
The findings come after a separate survey by Nationwide discovered that one in five prospective first-time buyers don't think they'll be able to buy until their forties. The average age is currently 33.
It has proposed a series of changes to the property market that it says will make it easier for people to get on the ladder, including regulatory and tax reforms.
The report has been backed by the BSA's five largest members - Nationwide, Coventry, Yorkshire, Skipton and Leeds - as well as the Intermediary Mortgage Lenders Association.
Find out more:1. Saving a big enough deposit
Three in 10 prospective buyers (31%) said saving was the biggest issue they faced, while one in 10 (10%) said it would take them at least six years to save enough money.
The challenges have been exacerbated by the rising cost of living. Half of respondents (52%) said they have less money free to put aside than before.
Three in 10 respondents (29%) said cost of living pressures had also affected the additional financial support they might have been able to get from family members.
What you can do:
Open a lifetime Isa: See if your family can help: Consider shared ownership: Find out more:2. Finding somewhere you can afford to buy
Nationwide says 70% of would-be buyers are willing to move up to 50 miles from their rented home to be able to buy a property of their own.
The BSA is calling for the government to ensure that house prices don't rise faster than earnings over the long term. It says this can be done by prioritising improving the supply of homes and revising the planning system.
What you can do:
Get savvy with portals and the Land Registry: Consider commuter towns: Spot an up-and-coming area:3. The cost of mortgage repayments
Even if you can save a big enough deposit, you might find that the projected mortgage repayments dent your hopes of homeownership.
The BSA says the government has heavily prioritised financial stability in recent years, with the strict regulatory environment resulting in fewer people being able to buy homes.
It says this should be reviewed, and that lenders should be given more freedom to offer a 'diverse range of mortgages'.
What you can do:
Look into longer mortgage terms: Check your loan-to-value: Speak to a broker:4. Being able to borrow enough for a mortgage
Both the BSA and Nationwide are calling for reforms to the borrowing caps imposed on lenders assessing your mortgage affordability.
Currently, lenders are only allowed to grant 15% of loans at four-and-a-half-times the applicant's household income or higher.
This means that people with lower incomes are being locked out of being able to borrow enough to buy a home.
What you can do:
Look into specific first-time buyer deals: Don't just stick to your bank:Advice for first-time buyers
Wherever you are on your home-buying journey, you can find lots of great advice and tips on our website.
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