Money Insider: It's tough for first-timers but there is hope


Despite enduring some of the toughest economic conditions witnessed in the UK over the past five years, first-time buyers (FTB) have far from given up on buying their own home, according to a report this week.

In fact the findings from Yorkshire Building Society reveal that the first-time buyers of today are more financially focused than those who bought before the credit crunch and are looking towards bricks and mortar to provide them with some financial certainty.

Back in 2006, when the mortgage market was booming, there were 408,000 mortgages taken out by first-time buyers, accounting for 36 per cent of all transactions. Five years on, that number (for 2011) was far lower at just 193,000; however, this accounted for 38 per cent of the market, so there's still a strong appetite, and a determination to get that first foothold on the property ladder.

The good news for potential homeowners is that many more mortgages are now available at 85 per cent and 90 per cent loan-to-value compared with just three years ago. It feels like a long time since most lenders were insisting on deposits of between 25 per cent and 40 per cent. However despite the improvement in product choice, 56 per cent of people say their biggest challenge is raising a large enough deposit.

According to data from the Council of Mortgage Lenders the average cost of a first home is £130,000. A 10 per cent stake means saving £13,000, and 15 per cent works out at £19,500 on a £130,000 home, something that may seem within reach if you're still living with your parents, but if you're living in rented property, the ability to save a decent sum each month on top of what you pay the landlord is just not achievable for many.

For those who are able to save a deposit, the ongoing mortgage costs have fallen sharply compared with this time in 2009. Back then a £110,000 best buy five-year fixed rate mortgage if you had a 15 per cent deposit would have been 5.75 per cent, with a £1,000 product fee, resulting in monthly repayments of £692. Today, Co-operative Bank is offering the same five-year 85 per cent LTV fixed rate deal at just 3.99 per cent and no fee. The vastly improved rate means your monthly repayments (assuming you opt for a 25-year term) come to £580 per month, and over the five-year term you'll pay out £7,700 less than the best deal just three years ago.

There are some tentative signs that the UK economy is starting to improve, and although it's early days, an improved outlook for growth and jobs will give more people the confidence to purchase a home of their own.

Affordability is no longer the issue for most first-time buyers, but raising a big enough deposit is still a massive issue. These latest findings reveal that one in five potential new buyers feel defeated before they start.

New customer surge at Co-operative Bank

The past week was National Ethical Investment Week, and there has been no shortage of stories highlighting how opting for a provider with an ethical pedigree is becoming increasingly popular.

One of the statistics that highlighted this trend came from the Co-operative Bank, which announced that it had signed up more than 100,000 new customers this summer with accounts transferred from banking rivals up a massive 43 per cent on last year.

It is the only major high-street bank to have a clear ethical policy which gives customers a say in how their money is used. And 2012 marks the 20th anniversary of the launch of the policy.

Robin Taylor, head of banking at the Co-operative Bank, said: "Feedback from customers that have recently switched has shown that the instigator for them was a desire to have a bank they could trust, underpinned by a responsible approach to banking and an ethical policy that directs who the bank will and will not finance."

Without shareholder demands, the member-owned Co-operative Bank is renowned for its high levels of customer satisfaction and range of competitively priced products. However, on the back of a number of high-profile banking scandals during 2012, it is the ethical principles that have been a big differentiator for consumers this year.

Andrew Hagger is an independent personal finance analyst from

Susan Sarandon described David Bowie as
peopleSusan Sarandon reveals more on her David Bowie romance
Arsenal supporters gather for a recent ‘fan party’ in New Jersey
sportDidier Drogba returns to Chelsea on one-year deal
Arts and Entertainment
The Secret Cinema performance of Back to the Future has been cancelled again
Life and Style
Balmain's autumn/winter 2014 campaign, shot by Mario Sorrenti and featuring Binx Walton, Cara Delevingne, Jourdan Dunn, Ysaunny Brito, Issa Lish and Kayla Scott
fashionHow Olivier Rousteing is revitalising the house of Balmain
Arts and Entertainment
Christian Grey cradles Ana in the Fifty Shades of Grey film
filmFifty Shades of Grey trailer provokes moral outrage in US
BBC broadcaster and presenter Evan Davis, who will be taking over from Jeremy Paxman on Newsnight
peopleForget Paxman - what will Evan Davis be like on Newsnight?
Life and Style
fashionCustomer complained about the visibly protruding ribs
The new dawn heralded by George Osborne has yet to rise
voicesJames Moore: As the Tories rub their hands together, the average voter will be asking why they're not getting a piece of the action
Dejan Lovren celebrates scoring for Southampton although the goal was later credited to Adam Lallana
newsComedy club forced to apologise as maggots eating a dead pigeon fall out of air-conditioning
Arts and Entertainment
Jo Brand says she's mellowed a lot
tvJo Brand says shows encourage people to laugh at the vulnerable
Life and Style
People may feel that they're procrastinating by watching TV in the evening
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Senior Risk Manager - Banking - London - £650

    £600 - £650 per day: Orgtel: Conduct Risk Liaison Manager - Banking - London -...

    The benefits of being in Recruitment at SThree...

    £18000 - £23000 per annum + Comission: SThree: SThree, International Recruitme...

    Test Analyst - UAT - Credit Risk

    £280 - £300 per day + competitive: Orgtel: Test Analyst, Edinburgh, Credit Ris...

    Trainee Recruitment Consultants - Banking & Finance

    £20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...

    Day In a Page

    Evan Davis: The BBC’s wolf in sheep’s clothing to take over at Newsnight

    The BBC’s wolf in sheep’s clothing

    What will Evan Davis be like on Newsnight?
    Finding the names for America’s shame: What happens to the immigrants crossing the US-Mexico border without documents who never make it past the Arizona desert?

    Finding the names for America’s shame

    The immigrants crossing the US-Mexico border without documents who never make it past the Arizona desert
    Inside a church for Born Again Christians: Speaking to God in a Manchester multiplex

    Inside a church for Born Again Christians

    As Britain's Anglican church struggles to establish its modern identity, one branch of Christianity is booming
    Rihanna, Kim Kardashian and me: How Olivier Rousteing is revitalising the house of Balmain

    Olivier Rousteing is revitalising the house of Balmain

    Parisian couturier Pierre Balmain made his name dressing the mid-century jet set. Today, Olivier Rousteing – heir to the house Pierre built – is celebrating their 21st-century equivalents. The result? Nothing short of Balmania
    Cancer, cardiac arrest, HIV and homelessness - and he's only 39

    Incredible survival story of David Tovey

    Tovey went from cooking for the Queen to rifling through bins for his supper. His is a startling story of endurance against the odds – and of a social safety net failing at every turn
    Backhanders, bribery and abuses of power have soared in China as economy surges

    Bribery and abuses of power soar in China

    The bribery is fuelled by the surge in China's economy but the rules of corruption are subtle and unspoken, finds Evan Osnos, as he learns the dark arts from a master
    Commonwealth Games 2014: Highland terriers stole the show at the opening ceremony

    Highland terriers steal the show at opening ceremony

    Gillian Orr explores why a dog loved by film stars and presidents is finally having its day
    German art world rocked as artists use renowned fat sculpture to distil schnapps

    Brewing the fat from artwork angers widow of sculptor

    Part of Joseph Beuys' 1982 sculpture 'Fettecke' used to distil schnapps
    BBC's The Secret History of Our Streets reveals a fascinating window into Britain's past

    BBC takes viewers back down memory lane

    The Secret History of Our Streets, which returns with three films looking at Scottish streets, is the inverse of Benefits Street - delivering warmth instead of cynicism
    Joe, film review: Nicolas Cage delivers an astonishing performance in low budget drama

    Nicolas Cage shines in low-budget drama Joe

    Cage plays an ex-con in David Gordon Green's independent drama, which has been adapted from a novel by Larry Brown
    How to make your own gourmet ice lollies, granitas, slushy cocktails and frozen yoghurt

    Make your own ice lollies and frozen yoghurt

    Think outside the cool box for this summer's tempting frozen treats
    Ford Fiesta is UK's most popular car of all-time, with sales topping 4.1 million since 1976

    Fiesta is UK's most popular car of all-time

    Sales have topped 4.1 million since 1976. To celebrate this milestone, four Independent writers recall their Fiestas with pride
    10 best reed diffusers

    Heaven scent: 10 best reed diffusers

    Keep your rooms smelling summery and fresh with one of these subtle but distinctive home fragrances that’ll last you months
    Commonwealth Games 2014: Female boxers set to compete for first time

    Female boxers set to compete at Commonwealth Games for first time

    There’s no favourites and with no headguards anything could happen
    Five things we’ve learned so far about Manchester United under Louis van Gaal

    Five things we’ve learned so far about United under Van Gaal

    It’s impossible to avoid the impression that the Dutch manager is playing to the gallery a little