1 Bradford & Bingley First Time Buyers Report 200
2 Bradford & Bingley s fourth annual First Time Buyers report is the largest of its kind. Carried out on our behalf by YouGov, it offers a detailed overview of the state of the market, the opinions of those who have just bought or who are trying to buy their first home, and their plans for the future. The survey represents the responses of around 1,00 people¹. Aged 18+, they have either bought a property in the last 12 months or are planning to buy in the next 12. Overall, they appear to be undeterred by increasing house prices and interest rates, and are clearly willing to make sacrifices when it comes to saving to buy a home. Working overtime, taking on second jobs and giving up holidays all play their part in ensuring that first time buyers can take that crucial first step onto the property ladder. And they re not averse to asking for contributions from their parents or teaming up with others to share the cost. Given the average level of debt carried by individuals in the UK, it s not surprising that most respondents owe money on credit cards, personal and student loans. However, the amount and variety of information available to them via all types of media has allowed them to become relatively astute when making large financial commitments. There s no doubt that first time buyers are not having an easy time finding and buying properties. But, provided they take a long-term view of property ownership, work out what they can realistically afford (factoring in potential interest rate rises) and have the patience to resist buying at any cost, their determination and willingness to make lifestyle compromises should ultimately pay off.
3 Work and play Most of those surveyed have made changes to their lifestyles in order to save for a property. When it comes to work, 32% are either putting in extra hours and/ or are taking on a second job. s (3%) have also relied on their parents for support financial and otherwise. Which, if any, of the following have you done to help you get on the property ladder? % % 32% Second job in the evening 20% Second job at the weekend Work overtime Financial help from parents 11% help from parents e.g., saving rent by living with them Take out a loan % Not done anything 3% 18% When it comes to leisure, the majority prepared to give up buying luxury items, socialising and holidays to free up cash for a deposit or mortgage costs. However, 2% feel that they are having to compromise more than they expected. What did you give up/cut back on? Nothing Rent moved back in with my parents to save Bills (e.g. mobile phone, TV subscriptions, gym) 21 Holidays Buying clothes 0 Going out to bars, clubs and restaurants Buying luxury goods )e.g. car, ipod, new personal computer)
4 'To be able to afford my first home, I am having to/had to compromise more than expected' % % 20% 1% Agree strongly Agree Neither agree nor disagree Disagree Disagree strongly 22% 32% The financial profile of our survey respondents reflects the nation as a whole. The majority (34% and more)owe money on credit cards, student loans and overdrafts, with only 19% stating that they do not have any debts at all. The 81% who are in debt generally owe from,000 to over 1,000 ) How much debt are you currently in? % Less than to 1,000 1,001 to 2,000 2,001 to 3,000 3,001 to 4,000 4,001 to,000,001 to 8,000 8,001 to 12,000 12,001 to 1,001 or Prefer not 1,000 more to say
5 Property profile Buying a property with a spouse/partner is the most popular option for first time buyers (3%), largely to share the financial burden. Who did you/will you be buying with? 1% % 2% 3% 30% On my own With my partner/ spouse With my parents With other relatives With a friend/ friends 3% What is the main reason buying with parents or friends? 1% 1% 8% % Financial reasons Want the company Don t want full responsibility for a mortgage reasons 84% And they have a variety of reasons for buying, ranging from wanting to settle down (20%) to simply wanting their own home (4%). Most have clear albeit rather high - expectations when looking for a property. Two or more bedrooms appears to be most important (8%), followed by good parking and/or close to public transport (4%) and a nice garden (3%).
6 What motivated you to buy your first home? It s an investment Starting a family 1 Getting married/ moving in with partner 30 Wanting my own home 4 Renting is a waste of money 3 Worried prices rising so fast that I would/ will never get on to the ladder 4 Time to settle down 20 Good time to get on the property ladder 1 4 What matters to you when choosing your first home? Two or more bedrooms 8 Close to public transport Good parking 4 4 Separate bedroom, i.e. not a studio flat Specific location/ road 31 Nice garden 3 Good decorative condition 2 Low council tax band 21 Close to bars and restaurants 13 Stamp duty band 1 Child friendly A property to renovate Close to family and friends 23 Nothing matters - I just want to own a home 4 None of these 2 Though they are prepared to compromise, primarily on location (40%), to get what they want. one in five respondents who have bought their first property paid the asking price (20%), while others steadily increased their offer or entered a bidding war.
7 How have you had to compromise? Move/ed further out of town / to a different part of town 40 Buying/ bought a cheaper property in a different area to rent out rather than to live in to get onto the property ladder Buying/ bought a cheaper property in a different country to rent out rather than to live in to get onto the property ladder 2 Buying / bought a cheaper property 29 Buying / bought a property lacking some amenities 1 Buying / bought a property in need of modernisation 30 Buying / bought a property in a less desirable area 28 Cash/ed in savings (premiums)/ shares 1 Moving/ moved to another area of the country Purchase/d in a regeneration area to avoid stamp duty 3 Take/ took in a lodger Will/ have gone into a shared ownership/key worker scheme Sell/ sold my car 3 Did not compromise in any of these ways Have you ever done any of the following? Paid the asking price to ensure I could secure the property before someone out bid me 20 Offered over the asking price because I knew other offers had been made 9 Made several offers, steadily increasingly to ensure I got the property over the other buyers making offers 1 Entered a bidding war but had to admit defeat as the property price became unaffordable Entered a bidding war and won Entered a sealed bid None of these I would not pay over the asking price Mortgages and costs Evidently, first time buyers struggle to pay a full deposit for their property. 4% will put down up to %, and 1% will opt for a 0% mortgage Most will choose a repayment mortgage (9%), though an alarming number (13%) will risk an interest-only mortgage with no repayment vehicle.
8 How much deposit have you paid/are you planning to pay? % 3% 9% 1% % 4% 12% 20% None buying the property outright None have 0% mortgage 1% to % of the property % to % 11% to 1% 1% to 20% 21% to 2% More than 2% 24% What type of mortgage? 1% 11% 13% % Repayment Interest-only (with separate investment vehicle e.g. an ISA or endowment Interest-only (without separate investmen vehicle) 0% As the majority (9%) believe that interest rates will increase over the next 12 months, it s unsurprising that the mortgage deal of choice is fixed rate (%) Conclusion The Bradford & Bingley First Time Buyer Report highlights a number of key facts about first time buyers. Like everyone else, they have a dream of home ownership and they re prepared to do what it takes to make it come true. Giving up holidays and luxury goods, working and saving harder are all acceptable lifestyle changes. However, today s first time buyer is less likely to compromise on their property wish list, which may potentially contribute to their perceived difficulties when looking for a home. (1)Survey carried out by YouGov amongst a representative sample of 1,4 first time buying adults aged 18+. Surveys took place between 22 nd and 29 th May 200. First time buyers were defined as those who had either bought in the last 12 months or are planning to buy in the next 12 months.