Here at Advantage, we spend our days helping clients ranging from individual self-builders to leading developers create the homes of the future, issuing structural warranties for projects of all sizes.
We’ve written recently about how exceptional levels of demand are driving house price growth, and about the various options available to tackle the UK’s under-supply of housing.
Faced with increasing demand and rising prices, it is often first-time buyers who struggle the most to make the transition from renting to buying. However, according to What Mortgage, working from home during the pandemic has had an unexpected advantage for some first-time buyers who have put money normally spent commuting towards their deposit instead.
Saving on commuting
Analysis by mortgage broker Trussle has revealed that buyers who would normally commute to London could have saved an average of £1,627 towards their first home as Covid-19 restrictions kept many workers in their homes.
The research zoned in on certain commuter regions to find out exactly how some first-time buyers could have benefited from the savings on train, bus and tube travel.
Researchers pinpointed Milton Keynes as one of the best locations for first-time buyer savings. Indeed, the study found, those saving for their first home in this location would have saved 12% of the deposit needed on the average two-bedroom property.
Savers in Bedford and Didcot in Oxfordshire were also reaping the rewards of not having to commute, with Trussle finding first-time buyers in these areas could have saved 11.8% and 10.9% respectively towards their first property.
Miles Robinson, head of mortgages at Trussle, said:
“We’re living in a time where many people’s finances have been impacted and household finances are stretched.
“Not only this, but the market is challenging for many first-time buyers at the moment because of a lack of high loan-to-value products and the ever changing strict lending criteria.
“However, money saved by working from home could offer some consolation for those who are currently saving to step onto the property ladder.
“For some first-time buyers, the savings from not taking their regular commute during lockdown could have added a boost to their deposits. Also, it’s likely they have saved on other costs like lunches in the city, which will have bolstered their deposits further.”
Lenders face capacity issues
However, although potential first-time buyers may have more savings available for a deposit, a recent feature by The Times highlighted the shortage of mortgage availability, following the cut in stamp duty.
The Times stated that there were 1,172 mortgage deals for those with a deposit of 10% or less last September compared with 76 now, according to the financial information firm Moneyfacts.
David Hollingworth, at broker London & Country, said:
“Mortgage lenders are facing major capacity issues in terms of processing. If they did not manage demand for those buyers with smaller deposits, the delays would just get worse.”