The latest research by Barrows and Forrester has taken a look at the reduced cost of getting on the ladder for first-time buyers specifically via the Government’s plans to reintroduce 5% mortgage deposits.

The research looks at the average first-time buyer house price, what a 5% deposit requirement looks like, and which areas of each region offer the most affordable route to homeownership via the latest government announcement in last week’s Budget. 

Average FTB mortgage deposit now just £10,536

In last week’s Budget, the government announced a guarantee to lenders offering mortgages to homebuyers with just a 5% deposit requirement up to the sum of £600,000. 

Research by lettings and estate agent, Barrows and Forrester, has looked at what this means for first-time buyers (FTBs) across Great Britain, based on the cost of a 5% deposit on the average first-time buyer house price in each region. 

Great Britain

The average first-time buyer house price in Great Britain currently sits at £210,727 meaning that British FTBs would need to save just £10,536 for a 5% deposit, compared to the usual 15% average of £31,609. 

Regional Difference

The North East remains home to the lowest average FTB property cost at just £120,953, meaning a 5% deposit will now require a saving pot of just £6,048 compared to £18,143 previously.

In contrast, London is home to the highest FTB house price at £431,160 and, as a result, the largest cost of a 5% mortgage deposit (£21,558). That said, the positive news for FTBs in the capital is the availability of a 5% deposit will see them benefit from the biggest reduction in mortgage deposit costs, down a huge £43,116 from £64,674.

Most Affordable 

The most affordable area across the entire UK is Inverclyde in Scotland. With £87,827 paid by FTBs in the area, they will now be able to obtain a mortgage for a deposit as little as £4,391. 

The North

Burnley (£4,406) in the North West and County Durham (£4,998) in the North East are both home to the lowest cost for a 5% mortgage in their respective regions.

Wales and the Midlands

Blaenau Gwent is home to the lowest initial financial barrier in Wales, with a 5% mortgage deposit costing a mere £5,156. In Yorkshire and The Humber, the City of Kingston upon Hull (£5,320) is the most affordable, while Stoke-on-Trent (£5,620) in West Midlands and Mansfield (£6,530) in the East Midlands also rank as the most affordable within their regions. 

The South

It’s no surprise that the costs start to increase slightly the closer we get to London. Although still relatively affordable, Great Yarmouth in the East of England is home to an average FTB house price of £154,614, requiring a 5% mortgage deposit of £7,731. 

In the South West, the City of Plymouth (£8,161) is home to the lowest 5% mortgage deposit, while in the South East it’s Southampton (£9,610).

Finally, London’s Barking and Dagenham ranks as the city’s most affordable area where the cost of a 5% FTB mortgage is concerned. That said, FTBs in the borough will still need to stump up £15,035.

Managing Director of Barrows and Forrester, James Forrester, commented:

“We’ve seen numerous schemes targeted at helping first-time buyers get on the ladder in recent years and rightly so. The cost of homeownership has spiralled drastically across Britain in the last 30 years and so it’s vital we do all we can to address this issue of affordability and remain a nation of homeowners. 

The great news is, that with a 5% mortgage deposit, the initial financial barrier of securing a mortgage will now be far lower than it previously was.

However, the latest scheme could have potentially detrimental effects, resulting in house prices climbing further out of reach for homebuyers. 

Allowing every man, woman and their dog to buy with a 5% deposit is almost certainly going to push up demand. Unfortunately, the government has yet again opted to turn their back where house building is concerned. 

The dangerous consequence of fuelling demand while neglecting stock delivery is always an inflated rate of house price growth and so in this respect, it could be a very counterproductive initiative indeed.”

Table shows the cost of a 5% deposit for a mortgage on the current first-time buyer house price in each region
Location	Average FTB house price – Dec 2020	5% deposit	15% deposit	Saving
North East	£120,953	£6,048	£18,143	£12,095
Scotland	£131,034	£6,552	£19,655	£13,103
North West	£154,175	£7,709	£23,126	£15,418
Yorkshire and The Humber	£156,387	£7,819	£23,458	£15,639
Wales	£159,106	£7,955	£23,866	£15,911
West Midlands Region	£180,558	£9,028	£27,084	£18,056
East Midlands	£180,670	£9,034	£27,101	£18,067
South West	£231,541	£11,577	£34,731	£23,154
East of England	£257,493	£12,875	£38,624	£25,749
South East	£271,016	£13,551	£40,652	£27,102
London	£431,160	£21,558	£64,674	£43,116
England	£224,560	£11,228	£33,684	£22,456
Great Britain	£210,727	£10,536	£31,609	£21,073
Sources	Gov.uk – UK House Price Index	Gov.uk – Budget 2021
Table shows the top 3 most affordable areas in each region of Britain based on the cost of a 5% FTB mortgage deposit
Region	Location	Average FTB house price – Dec 2020	5% deposit	15% deposit	Saving
East Midlands	Mansfield	£130,593	£6,530	£19,589	£13,059
East Midlands	Bolsover	£133,366	£6,668	£20,005	£13,337
East Midlands	Lincoln	£142,035	£7,102	£21,305	£14,203
East of England	Great Yarmouth	£154,614	£7,731	£23,192	£15,461
East of England	City of Peterborough	£164,740	£8,237	£24,711	£16,474
East of England	Fenland	£169,555	£8,478	£25,433	£16,955
London	Barking and Dagenham	£300,706	£15,035	£45,106	£30,071
London	Bexley	£315,347	£15,767	£47,302	£31,535
London	Croydon	£321,614	£16,081	£48,242	£32,161
North East	Hartlepool	£91,691	£4,585	£13,754	£9,169
North East	County Durham	£99,964	£4,998	£14,995	£9,996
North East	Middlesbrough	£102,224	£5,111	£15,334	£10,222
North West	Burnley	£88,125	£4,406	£13,219	£8,813
North West	Hyndburn	£95,136	£4,757	£14,270	£9,514
North West	Pendle	£96,308	£4,815	£14,446	£9,631
Scotland	Inverclyde	£87,827	£4,391	£13,174	£8,783
Scotland	East Ayrshire	£89,814	£4,491	£13,472	£8,981
Scotland	North Ayrshire	£93,571	£4,679	£14,036	£9,357
South East	Southampton	£192,209	£9,610	£28,831	£19,221
South East	Hastings	£197,204	£9,860	£29,581	£19,720
South East	Isle of Wight	£197,544	£9,877	£29,632	£19,754
South West	City of Plymouth	£163,210	£8,161	£24,482	£16,321
South West	Gloucester	£180,207	£9,010	£27,031	£18,021
South West	Torbay	£182,450	£9,122	£27,367	£18,245
Wales	Blaenau Gwent	£103,118	£5,156	£15,468	£10,312
Wales	Merthyr Tydfil	£105,269	£5,263	£15,790	£10,527
Wales	Rhondda Cynon Taf	£116,596	£5,830	£17,489	£11,660
West Midlands Region	Stoke-on-Trent	£112,401	£5,620	£16,860	£11,240
West Midlands Region	Wolverhampton	£144,406	£7,220	£21,661	£14,441
West Midlands Region	Newcastle-under-Lyme	£147,824	£7,391	£22,174	£14,782
Yorkshire and The Humber	City of Kingston upon Hull	£106,394	£5,320	£15,959	£10,639
Yorkshire and The Humber	North East Lincolnshire	£120,282	£6,014	£18,042	£12,028
Yorkshire and The Humber	Barnsley	£125,231	£6,262	£18,785	£12,523
Sources	Gov.uk – UK House Price Index	Gov.uk – Budget 2021

NOTES:

–          Barrows and Forrester is a multi-award winning, independent lettings and estate agent located in Birmingham.

–          James Forrester has worked within the property industry for 20 years, 10 of which have seen him apply his expertise within the Birmingham property market in particular. 

–          James is also a director of StripeHomes, a company specialising in top-quality new build developments in the North East. 

–          As a result, James has an unrivalled knowledge of the sales, lettings and new build sectors, making him an accomplished, all-round property market commentator.