Recent research from Moneybox Home-buying, a leading provider of Lifetime ISAs in the UK, reveals a significant trend among first-time buyers (FTBs) towards using their own savings for home purchases. This shift indicates a reduced reliance on the ‘Bank of Mum and Dad,’ with the number of FTBs planning to buy with their own savings increasing by 57% over the last year.
The study, which surveyed 1,000 prospective homeowners, found that 76% plan to use their savings to buy their first home, while only 20% expect financial support from family for their deposit. Another 20% hope to benefit from an inheritance.
Despite these changes, saving an adequate deposit continues to be a major challenge. In 2023, the average deposit paid by Moneybox Mortgages customers was £66,000, with a median of £35,000. This indicates that even those receiving some family support must still save substantial amounts.
In the past six months, the amount saved monthly towards deposits has decreased by 18%, from £344 to £287. One-third of respondents have extended their saving period to accumulate a larger deposit.
However, there’s a positive note: half of the survey respondents feel closer to achieving their homeownership goals than six months ago, with 17% even increasing their monthly savings.
Brian Byrnes, head of personal finance at Moneybox, said: “While owning a home is still a top financial goal for most people, it appears that Bank of Mum and Dad could be starting to struggle to support their children’s property ambitions to the same extent as in previous years.
“As the cost-of-living puts pressure on household finances the obstacles facing prospective homeowners have only increased in the last year.
“Affordability and saving a suitable deposit are among the biggest concerns and it is clear that more support is needed to help the next generation of home buyers navigate the changing market conditions.”
The survey also highlighted the popular savings products for first home deposits: Easy Access Savings Accounts (43%), Cash ISAs (37%), and Lifetime ISAs (17%).
Byrnes added: “Saving in a Cash ISA will typically offer a better rate than an easy access account and will also ensure your savings are protected from the tax man.
“The Lifetime ISA also provides invaluable financial support to FTBs, and so for anyone wanting to do all they can to boost their deposit savings, it can really pay to consider the best mix of savings products to help you achieve your goal as quickly as possible.”
