First time buyers rely on parents (From Worcester News)

First time buyers rely on parents

11:48am Thursday 9th July 2009

© Press Association 2009

Eight out of 10 young people are thought to be receiving help from their parents to raise the huge deposits they need to buy their first home, research has shown.

A record 80% of first-time buyers under 30 are thought to be receiving parental backing, as they continue to put down deposits worth 25% of their property's value, according to the Council of Mortgage Lenders.

But the group said there were signs that banks and building societies had stopped tightening their lending criteria during May.

The average first-time buyer put down a deposit of just under £32,000 during May, only marginally less than their average annual salary of £32,840.

The Council of Mortgage Lenders (CML) said it was unlikely that young borrowers would be able to build up deposits of this size from their own resources.

Its estimate for the number of first-time buyers receiving help is well up on previous figures that suggested half of all buyers under 30 received money from the Bank of Mum and Dad during the second quarter of 2008.

But despite the huge deposits that first-time buyers are continuing to have to raise, the number of people buying their first home with a mortgage rose for the fourth month in a row during May.

Around 14,000 first-time buyers got on to the property ladder during the month, the highest number since October and well up on the low of 8,900 in January.

But the figure is still a far cry from the 30,000-plus people who bought their first home each month before the credit crunch struck.

The CML said there are signs that lenders have stopped tightening their lending criteria, with the average deposit put down by first-time buyers remaining unchanged at 25% for the past four months, while the average income multiple also held firm at 2.97.