Half of first time buyers seek parents help

Almost half of first time buyers are looking to their parents to help them reach the first step on the property ladder, according to a new survey.

As banks tighten their belts in the credit crunch and demand considerably higher deposits on properties, the Council of Mortgage Lenders claimed that despite falling house prices, up to 50% of buyers under the age of 30 were looking to parents or grandparents to help make up their deposit.

The figure has risen from 38% of buyers seeking help in 2006.

Despite falling prices, many lenders have now withdrawn several high loan-to-value (LTV) mortgages in an attempt to reduce their risk factor – forcing many borrowers to put forward deposits of up to 25%.

The average deposit has now been put at £19,000 – a rise of £4,000 when compared to figures from twelve months ago.

"In the current market environment, 100% mortgages are not so widely available," the CML said.

"Many lenders typically require a higher deposit from borrowers than before.

"So even though the total needed to buy a house is declining, first-time buyers are facing a new affordability challenge in the shape of a higher deposit required by lenders."

The CML did however suggest that the trend may reverse as the UK heads into recession, as stretched family finances make it difficult for parents to assist their offspring.

"If this flow of help for young buyers dries up, then opportunities for young would-be buyers to enter the market could be severely limited, and we may see their numbers decrease significantly beyond what are already record low points," the CML added.