More than one in three first time buyers in the UK have missed out on potential home deals because their deposit was too small to secure a mortgage, new research has found.
Some 35% of would be first time buyers found themselves in this position and around half had more than 10% of the purchase price saves, according to the study from the Nottingham Building Society.
The research also reveals how hard it is to save enough for a deposit with 18% saying they had a deposit of less than 10% while 17% had less than 20% of the house price they were planning to buy.
Figures from the Council of Mortgage Lenders show total borrowing by first time buyers hit a record of £53.2 billion last year with more than 338,900 loans completed and that the average loan to value is currently around 84.3% on loans of £132,400, typical first time buyer territory.
But the research suggests that first time buyers are still struggling to buy the homes they want despite having saved deposits. More than half, some 51%, of first -time buyers say they have a deposit saved before looking to buy.
‘Borrowers with small deposits have a wide choice of loans to pick from but clearly many are struggling to buy the houses they want with so many potential deals falling through. It is particularly worrying that borrowers with a 10% deposit or more are struggling. They should be able to secure a mortgage and not have to miss out on house purchases simply because their deposit is too small,’ said Ian Gibbons, senior mortgage broking manager at Nottingham Mortgage Services.
He believes that the withdrawal of the Help to Buy mortgage guarantee scheme will have had some impact but in general the advice is always to search the market and get specialist advice on the range of options available.
The research also found that 42% of first time buyers would be comfortable borrowing 15% or more of the purchase price of their first home. Around 10% would be willing to borrow 100% of the price.