Falling savings put first-time buyers under greater pressure

Young Brits are seeing their prospects of homeownership squeezed as the rising cost of living cuts down savings.

Over a third of Brits aged 25 to 34 – with the average first-time buyer according to the Council of Mortgage Lenders (CML) now 29 – are now unable to save at all as the cost of essentials such as fuel and food increase.

Meanwhile 16 per cent of people in the age group are saving less than a year ago.

Only nine per cent of 25-34 year olds say they are saving more than they were a year ago.

"First-time buyers need to have a larger deposit that they did a year ago - in some cases as much as 25 per cent as many mortgage lenders continue to restrict their deals, so those looking to get onto the property ladder need to be saving more not less," said Neil Cameron, savings manager at Sainsbury's Finance, which carried out the research.

"Despite this, our research suggests that more people in the first-time buyer age group are now saving less."

Many lenders, including high street giants Halifax and Nationwide, have reshaped their product portfolios in recent weeks, now requiring higher deposits on some loans and offering higher interest rates.

"Those people saving for a deposit on a property should review any savings account they are using for this and make sure that they have one that pays a consistently attractive rate that does not penalise you for withdrawing your money should you need to," advised Mr Cameron.

The research comes as savings rates are now at their highest in two years, according to research from Defaqto.