There were around 785,000 first-time buyers in England last year, according to the latest English Housing Survey, with many helped by the Bank of Mum and Dad.
The government survey, published annually, gathers information on people’s housing circumstances, as well as their demographic profiles.
The 2017-18 survey found that more than three-quarters (76%) of first-time buyers used savings to fund the purchase of their first home, whilst 39% had help from family or friends and 10% used an inheritance. Many first-time buyers used a combination of these sources to help them get onto the property ladder. The average age of first-time buyers rose to 33 in 2017-18, up from 31 a decade earlier.
Almost half of first-time buyers (46%) had a mortgage term of 30 years or more, whilst 50% had a mortgage with a term of 20-29 years. Only a small proportion (3%) had mortgages with a term ranging from one to 19 years.
Opting for a longer repayment term can help reduce monthly payments, but it’s important to remember that the longer the term you choose, the higher your interest costs will be.
Difficulties saving a deposit
On average, those renting spent 33% of their household income on their rent in 2017-18, whereas those who own their own homes typically only spend 17% of their income on mortgage payments.
Steep rental costs often make it much harder for first-time buyers to build up a deposit, although there are government schemes such as the Help to Buy ISA and the Lifetime ISA which are designed to help those struggling to save.
Gap between mortgage holders and outright owners narrows
The number of people taking out a mortgage rose for the first time in a decade, the survey showed, by 5% to 6.9m.
Although there are still more property owners who own their homes outright compared to people who own properties with a mortgage, the gap between these two groups is narrowing.
In 2017-18, 34% of households were outright owners, whilst 30% were buying with a mortgage. In 2016-17, the same percentage (34%) owned their properties outright, whilst 28% bought with a mortgage.
According to the survey, the large proportion of outright owners is due to an ageing population and large numbers of baby boomers paying off their mortgages once they reach retirement age.
The number of people who own their own home currently stands at 14.8m out of 23.2m households. The proportion of people who own their own home rose to 64% in 2017-18, up 1% compared to the previous year, but still well below its peak of 71% in 2003.
First-time buyer numbers hit highest level in 12 years