First-time buyers put dreams of home ownership on hold over cost-of-living worries

First-time home buyers are putting dreams of home ownership on hold because of worries about the cost of living, according to new research commissioned by HSBC.

Key findings from research:

• • Research commissioned by HSBC shows one in four first-time buyers (25%) have either put home-ownership plans on hold or stopped their search entirely.
  • Younger age groups say their biggest challenge is saving a deposit (38%), with nearly one in five (19%) 25- to 34-year-olds saying they live with parents, family or friends.
  • The data also shows most people need more help in understanding common mortgage terms including “APR” [1] , “SVR”, and “Base rate” – especially first-time buyers.

One in four (25%) say they’ve either put plans on hold or have decided to stop looking for their first property. Nearly another quarter (23%) are now considering buying a cheaper property, with a further 18% considering looking for a mortgage with lower monthly repayments.

And it’s not just those looking for their first home who are changing their plans. One in four (25%) existing homeowners say the cost of living crisis has made them rethink their future – including more than one in ten (13%) who say they are no longer looking to move house.

The digital survey by YouGov reveals three in five people in Britain (60%) own their home, either outright or with a mortgage, just over a quarter (27%) are in rental accommodation, and just over one in 10 (11%) live with parents, family, or friends.

But those percentages vary widely with age, with 57% of 18- to 24-year-olds saying they live with parents, family or friends – and nearly one in five 25- to 34-year-olds (19%) still doing the same. [2]

The size of the deposit needed to buy a home is the most common reason people say they haven’t applied for a mortgage (18%) [3], but that number is far higher among younger age groups – reaching 38% for 25- to 34-year-olds.

When people are looking for a mortgage provider, they say they’re most likely to look for information on money saving websites (34%), mortgage provider websites (34%), get recommendations from friends and family (33%), use a broker (32%) or a comparison website (31%).

Despite all these different ways of looking for information, most Brits say they don’t understand many of the most-commonly used terms associated with mortgages – even more so if they’re a first-time buyer.

When it comes to making the decision to go ahead and purchase that mortgage – the most important driving factor is the interest rate on offer (64%) but nearly half (45%) say trust in the brand is also key – ahead of recommendations from family and friends (26%) or other sources (34%).

[1] Following the adoption of the Mortgage Credit Directive into MCOB, ‘APR’ was replaced by the ‘APRC’ or Annual Percentage Rate of Charge’ in mortgage documentation.

[2] Living with parents, family or friends by age group: 18-24 (57%), 25-34 (19%) 35-44 (7%), 45+ (7%).

[3] Most common reasons for not applying for a mortgage: size of deposit (18%), personal living expenses (15%), cost of the mortgage (14%), rising interest rates (10%).

[4] Following the adoption of the Mortgage Credit Directive into MCOB, ‘APR’ was replaced by the ‘APRC’ or Annual Percentage Rate of Charge’ in mortgage documentation.

Kindly shared by HSBC UK

Main article photo courtesy of Pixabay