CreditLadder and Equifax research finds that new 5% deposit scheme could be the key to the door for 33% of first-time buyers

As the average first-time buyers’ deposit reaches nearly £59,000, £12,000 more than a year ago, new research conducted by CreditLadder and Equifax found lack of savings for a deposit is preventing over a third (34%) of first-time buyers getting on the property ladder. However, encouragingly, 33% see the new 5% deposit mortgage scheme as the help they need.

Affordability for first time buyers is also a barrier to getting on the property ladder, however Government schemes are helping make a difference for potential buyers.

The joint CreditLadder and Equifax research found that 62% of respondents had looked at Help to Buy schemes, 26% shared ownership, 18% right to buy/right to acquire and 18% starter home schemes.

Sheraz Dar, CEO of CreditLadder comments: “The new Government backed mortgage scheme launched in April is good news for many first-time buyers who have struggled to raise the 10% or more deposit needed to secure a mortgage.

“But a reduced deposit isn’t the only thing needed to help those trying to get on the property ladder.

“One in five respondents to our research also said that the Stamp Duty holiday introduced last July had prompted them to look at buying a property and if it were completely removed for properties under £500,000 nearly half (48%) said it would encourage them to think about buying a property in the next 12-months.” The Stamp Duty holiday is ending on June 30th.

Lisa Hardstaff, Head of Customer Experience at Equifax adds: “The research clearly demonstrates the barriers first-time buyers are facing. However, it is not just about how much you can afford, the deposit raised or what type of mortgage is required – first-time buyers need to be ‘mortgage ready’ when it comes to their credit information too.”

To ensure first-time buyers are in the best position to obtain a mortgage they need a good credit history. This will allow them to secure the right mortgage deal for their financial situation. However, those first-time buyers who have traditionally rented can have ‘thin’ credit files due to a limited borrowing history.

One way to build a credit history and show lenders that they can manage their financial commitments is to add rental payments to your credit report information and over time this should help strengthen an individual’s credit history and their credit score.

“The inclusion of rental data in mortgage assessments is a huge lift to improve financial inclusion and fairer access to the right financial products”, concluded Sheraz Dar.

“This data insight provides lenders with a much more reflective picture of renters’ ability to manage their finances. Renters who make full and timely monthly payments should see a significant benefit in proving their ability to repay a commitment, just like mortgage payers.”


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