95% mortgages: Which areas are set to see the biggest benefit to homebuyers?

Property Reporter
29th April 2021
FTB 77

According to recent analysis, depending on where you live could see you reduce the time to save for a deposit by over two years should you take advantage of a 95% mortgage.

Research from national UK estate agent, Keller Williams UK, analysed the current average house price across each area of the market, what this would require for both a 15% and 5% deposit, and how many months of net monthly income was required to save each deposit.

Benefit to British Homebuyers

The research shows that across Britain, it would currently require the average homebuyer to stump up 18 months of earnings (£2,105) in order to accumulate the £37,998 required for a 15% deposit on the current average house price of £253,323.

In contrast, a 5% deposit of just £12,666 would only require them to place six months earnings as a mortgage deposit, reducing the number of months required to save by a whole year.

By Region

The biggest benefit to homebuyers looking to utilise the 95% Government-backed mortgage will be in London. With the average homebuyer earning £2,723, it currently requires 27 months of income to place a 15% deposit on the current average house price of £496,269. However, the ability to place just a 5% deposit means the income required reduces to just 9 months, a reduction of 18 months.

The South East and South West will also see some of the biggest reductions in the monthly earnings required to place a deposit, with both reducing by 15 months. The East of England (14), East Midlands (11), West Midlands (11), Wales (10), Yorkshire and the Humber (10) and North West (10) will also see a double-digit reduction in the number of months income required to place a deposit.

Biggest Reductions in Britain

With London home to the largest regional reduction, it’s no surprise that the capital also accounts for some of the biggest reductions at local authority level. Currently, the average buyer in Westminster is required to place 39 months of average earnings to cover a 15% deposit on the average house price of £1,000,650. A five per cent deposit would see this required earnings reduce by over two years (26 months).

Camden (26), Haringey (25), Islington and Hackney (24) would also see the monthly earnings required to place a deposit reduce by more than two years.

Outside of London, Tandridge would see the average monthly earnings required to place a deposit fall by 12 months when comparing the requirement of a five per cent deposit to that of a 15% deposit, as would Epsom and Ewell.

Ben Taylor, CEO of Keller Williams UK, commented: “While a stamp duty saving is currently a nice cherry on top for many homebuyers, the saving made pales in comparison to the initial financial hurdle of a mortgage deposit. So the ability to secure a Government-backed mortgage with just a five per cent deposit should significantly boost buyer sentiment across the market.

"It’s not just the sum required to take that first step onto the ladder that will see a notable reduction, but also the time it requires many to amass this sum. With aspirational homebuyers able to get on the ladder for less and at greater speed, a continued stream of buyer interest should keep the housing market buoyant from both a transaction and house price growth perspective, to say the least.”

Related articles
More from Finance
Latest from Financial Reporter
Latest from Commercial Reporter
to our newsletter

Join a community of over 30,000 intermediaries and keep up-to-date with industry news and upcoming events via our newsletter.