Many first-time buyers are being held back from getting onto the property ladder because of the cost-of-living crisis and inflation, finds a new report.
Findings from the Aviva survey revealed that the cost of a mortgage is being substantially underestimated, with the potential to dissuade more people from buying their own home for the first time.
The report shows that the role of intergenerational giving remains as important as ever for helping first-time buyers.
Twelve per cent of respondents said they were expecting a gift or loan from parents to help meet their costs, and four per cent said they expect the same from grandparents.
Interestingly, individual contributions are more generous from grandparents – typically they contribute a gift of £18,850, and £16,990 as a loan, compared with £17,730 and £14,130 respectively from parents.
Matt McGill, MD Aviva Equity Release, commented, “The cost-of-living crisis, and other factors resulting in higher inflation and interest rates, have put pressure on people juggling competing financial demands. Events of the past few months have created uncertainty; nobody can predict the outlook for the coming months with any confidence.
McGill added, “Despite resilient housing market activity, it now appears rising mortgage rates are dissuading many from taking that important first step onto the property ladder.
“In years to come, this will have a knock-on effect for younger people today. Wealth held in property contributes greatly to someone’s overall assets and can be used as a valuable source of funds, particularly later in life. In the event of any property market adjustment, most people’s most valuable asset will still be their home.
“Earlier this year, our retirement survey showed those over 75 had on average lived in their property for 28 years. Over that time, they have seen a more than five-fold increase in their property’s value. Sixty-five to 74-year-olds are also seeing a more than four-fold increase in the value of their property, over the average 24 years they have owned it.”
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