Average Help to Buy mortgage guarantee deposit falls to under £9,000 in September as purchase prices dip

  • Typical HTB2 deposit was £8,974 in September – 87% lower than the purchase market average
  • HTB2 applicants buying property priced 34% lower than the purchase market average
  • Scheme means consumers could be homeowners within 9 months

Home buyers using the Help to Buy mortgage guarantee scheme (HTB2) were able to access the property ladder with average deposits of just £8,974 in September, according to new data from Mortgage Advice Bureau, the UK’s best known broker brand.

This is a 3% decrease since August – when the average HTB2 deposit was £9,229 – and significantly lower than September’s purchase market average of £67,929 (-87%).

Compared to a typical purchase price of £226,641 in the wider market, HTB2 applicants paid an average of £150,488 in September: the lowest price recorded in four months and a 6% decrease since August (£159,527).

This suggests the scheme is hitting the mark in terms of attracting less affluent buyers who are looking to purchase lower-priced first homes.

The average LTV for a mortgage guarantee applicant was 94% – just 1% below the scheme’s limit – in comparison to 70% in the rest of the purchase market.

The fall in average HTB2 deposit has occurred because consumers using the scheme in September opted for lower cost properties, while also making the most of the scheme’s 95% maximum loan-to-value (LTV) limit.

As a result, they also borrowed less: the average HTB2 loan was £141,514 in September, 6% below August’s figure of £150,298 and almost £20,000 less than the typical house purchase loan in the wider market (£158,712).

HTB2 applicants could be homeowners in 9 months

The significantly smaller deposit required for a Help to Buy mortgage guarantee makes the burden of saving far easier for stretched first-time buyers.

Help to Buy mortgage guarantee applicants had an average primary income of £31,270 in September, representing £2,018 in monthly take home pay*. If applicants saved 25% of this pay each month, they could raise September’s average HTB2 deposit within 1.4 years – even if they had no pre-existing savings.

The outlook is even better for potential buyers who are splitting the cost of a deposit with a partner or friend with an equal salary, as saving 25% would see them achieve this goal within 9 months.

Brian Murphy, head of lending at Mortgage Advice Bureau, commented:

“The Help to Buy mortgage guarantee scheme continues to fill a void in the market in terms of affordability, offering a realistic way into the property market for buyers who are unable to save a large deposit.”

“The generosity of the 95% loan-to-value associated with the scheme is clearly not being abused: lower earners are using the scheme to purchase lower-priced properties and are taking on much smaller levels of debt as a result.”

“Our data shows that even those aspiring owners who haven’t begun the task of saving until now can still feasibly become homeowners through the scheme in a relatively short space of time, while sharing the deposit with a partner or friend could reduce this period of saving to under a year.”