- Two-thirds say cost of living has impacted their disposable income, making it harder to save a deposit
- 58% have pushed back their homebuying plans
- 42% YOY increase in people opening a Moneybox Lifetime ISA to avail of 25% government bonus available on deposit savings – up to £1000 each year
Moneybox, the largest provider of Lifetime ISAs in the UK has unveiled the extent to which the confidence and homeownership aspirations of first-time buyers have been impacted by escalating costs and uncertainties in the mortgage market over the last year.
In its biannual study of 1,000 aspiring homeowners across the UK, Moneybox found that 35% of aspiring first-time buyers feel optimistic about becoming a homeowner – however, this is down from 42% a year ago.
Over half (58%) say they have pushed back their home-buying goals and now plan to buy later than previously hoped.
Only 10% believe they will be able to buy within 12 months, down from 35% in November 2022.
Two-thirds (64%) said the cost of living has impacted their disposable income, making it harder to save a deposit, while 51% are concerned about high interest rates, the research commissioned by Moneybox Homebuying found.
Despite this, becoming a homeowner remains a priority for 82%, with half saying this financial goal is very important to them.
This is nearly twice as many as the 24% who said buying a home of their own was very important to them last year.
Among those feeling optimistic, 23% have seen their household income increase in the last year, 25% are hopeful that house prices are falling and 17% have managed to save more into their deposit than expected.
More than six in 10 (62%) are driven to get on the property ladder to feel more financially secure, 56% want to stop renting and 56% want to have control over their home rather than their landlord having the final say.
Brian Byrnes, head of personal finance at Moneybox, said: “First-time buyer hopefuls have endured a sustained period of economic and mortgage market uncertainty yet despite this, the desire to own a home has increased significantly and remains their most important financial goal. In fact, so far this year we’ve seen a staggering 42% increase in the number of new customers opening a Lifetime ISA, to avail of the 25% government bonus on their deposit savings, a boost of up to £1000 free money each tax year.”
“There can be no doubt it has become increasingly difficult to get on the property ladder in recent years and first-time buyers need more support. We also know that saving a suitable deposit remains one of the biggest hurdles many face on the journey to buying a home.”
“That is why the Lifetime ISA is such a lifeline for so many – with more than 117k first homes purchased with the help of a LISA, far sooner than would have otherwise been possible.”
The study also found 39% of prospective first-time homeowners have chosen to bide their time until the housing market is calmer before trying to buy.
Two in three (66%) have adjusted their homebuying budget and goals within the last six months, with 29% compromising on their ideal location. 27% have decided to save for a larger deposit.
Those actively saving their first home deposit are putting aside £287 on average each month and hope to buy in under four years.
The research carried out via OnePoll, found more people are relying on their personal savings to fund their home purchase – 76% compared to just 48% a year ago.
The number looking for financial support from their family has dropped from 24% at the end of 2022 to 20% now.
Brian Byrnes from Moneybox added: “At a time when first-time buyers most need a helping hand, we believe far more could be benefiting from the fantastic Lifetime ISA government bonus than are currently doing so.
“However, the Lifetime ISA may not be suitable for everyone who is eligible for it so it’s important to do your research.
“While 90% of our Lifetime ISA customers who’ve bought their first home, paid less than £404k, the LISA property price cap of £450k may be a cause for concern for some living in the most expensive parts of the country.
“There is also a 25% government penalty fee on all unauthorized withdrawals meaning savers may get back less than was paid in.
“Don’t be afraid to seek advice from home-buying experts to help dial down the noise, and thoroughly prepare for your home-buying journey, with greater confidence.”
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Moneybox is the award-winning app on a mission to help people build wealth with confidence so they can enjoy life, today and tomorrow. Launched in 2016 by co-founders Ben Stanway and Charlie Mortimer, the company has experienced rapid growth, and today has over £5bn in assets and a community of more than 1 million customers. Moneybox provides a range of great value products and services, across saving, investing, home-buying, and retirement as well as helpful tools and educational content, to help people manage and achieve their short, mid, and longer-term financial goals. Moneybox enables customers to set money aside in the way that suits them best using round-ups, regular deposits, or instant payments. In March 2022 Moneybox raised £35m in a Series D funding round, led by Fidelity International Strategic Ventures, existing investors Oxford Capital, CNP, Burda and Breega, plus new investor Polar Capital. This brings total funds raised by the digital wealth manager to £100+ million.