Family values

First-time buyers now need to raise a deposit of a year’s salary to get a foot on the housing ladder. Are they all effectively shared owners now?

New figures issued by the Council of Mortgage Lenders (CML) today show that the average advance for a first-time buyer in August 2009 was £100,000 and was worth 75% of the value of their home. That means the average deposit was just over £33,000 - the same as the average salary.Contrast that with August 2007, just before boom turned to bust.

The homes first-timers were buying were worth £132,000, about the same as now, but they were getting a 90% mortgage on that worth £119,000.

The average deposit of just over £13,000 represented just over four months’ worth of their slightly higher £35,000 salary.The CML estimates that 80% of first-time buyers are now receiving help from their family compared to a little over 40% two years ago - an extraordinary statistic given that homes have apparently become more rather than less affordable in that time.

Interest payments now take up 15.2% of their income compared to a peak of 20.7 at the end of 2007 while mortgages are worth just over three times their income compared to a peak of 3.38.

The other obvious source of a deposit for first-timers is their local housing association. It remains to be seen whether loans from parents and grandparents will ever actually be repaid but their effect is remarkably similar to the equity loans available through homebuy schemes. Which begs the question of why lenders are apparently more resistant to housing help (especially shared ownership rather than shared equity) when it comes from the state rather than the family.

The other stats show a first-time buyer market that is still sclerotic. The number of first-time buyer loans is up 29% on this time last year but not much more than half what it was in 2007. There is also some evidence that the recent recovery is slowing down - the number of loans was actually down 5% on July.