CML news & views

Thousands of newspaper columns have been printed about the difficulties facing young people trying to buy their first property in the UK. In the boom years, rising prices were understood to be forcing young people to save for longer to raise a deposit and/or achieve greater incomes to get a mortgage.

More recently, although house prices have fallen, lenders have tightened both income multiple and loan-to-value (LTV) criteria in response to the deteriorating economy and shortage of mortgage funding. As a result of this, you guessed it, young people should have to save longer for larger deposits and achieve greater incomes to get a mortgage. In both cases, the common perception is that first-time buyers must be getting older. But are they?

Our monthly Regulated Mortgage Survey (RMS) shows the profile of first-time buyers throughout the UK. This reveals that since 2005, the median age of a first-time buyer has not changed (aside from insignificant fluctuations). We use medians when looking at typical buyer characteristics because with large data sets, such as the RMS, median statistics can better reflect typical behaviour and also help to control for any outlying (abnormally small or large) figures. 

But just in case you think the median age is suspiciously static, the mean figures have stayed equally immobile, although the mean first-time buyer age is about 31, compared to a median of 29.

Average age of first-time buyers

Source: CML

So, if first-time buyers aren’t getting any older (or younger), despite logic suggesting otherwise, why is this?  We need to delve further into the data to learn more...

In previous CML research we found that an increasing number of first-time buyers were getting help – most likely from parents or grandparents – to raise funds for a deposit. The latest estimates indicate that around 80% of young first-time buyers are getting help in this way. 

Clearly drawing on your family for a deposit can help you get on the housing ladder earlier than if you had to save for the deposit yourself. So it follows that the growing incidence of assistance may be keeping down the average age of first-time buyers overall. 

But what about those who do not get help?

Borrowers’ age profiles tend to evolve very slowly, but when we strip out those borrowers identified as having received help, a striking pattern emerges. Up until late 2007 - around the time the credit crunch began – the average age of first-time buyers excluding those getting help, was fairly stable at around 33. But since then, the average age has risen very sharply and now stands at around 37. 

Average age of first-time buyers (excluding those receiving assistance)

Source: CML

Even when house prices were rising rapidly, credit was relatively easy; so many young people remained able get on the housing ladder without family help through higher LTVs and income multiples. 

However, lending criteria have been scaled back to such an extent in the credit crunch that it has become exceptionally difficult for young people to get a mortgage without external help for a deposit. And without that assistance, those buyers would be considerably older before they had the financial wherewithal to get a mortgage, and the average age of first-time buyers would be significantly higher. 

In recent months lending criteria have begun to ease somewhat. And whilst the average age statistics will probably not change, underneath the surface it is likely that that those young people not lucky enough to receive help from family, will not have to wait quite so long before getting a mortgage.