The average deposit for house purchases using the Help to Buy mortgage guarantee scheme reached a 10-month high in February, according to Mortgage Advice Bureau.
Buyers using the scheme in February put forward an average deposit of £9,936, up 9.2 per cent from £9,099 in January. It meant the average Help to Buy 2 deposit reached its highest level since April 2014, when it stood at £11,438.
Deposits have now risen for three consecutive months from a low of £7,856 in November 2014.
MAB calculates that borrowers will be able to reach the current average of £9,936 in 15 months by using the soon-to-launch Help to Buy Isa – 10 months faster than without it.
Under the scheme, the Government boosts savings by 25 per cent to a maximum of £3,000. Would-be homeowners using the scheme would only have to save £7,949 to reach the current average deposit as the Government would top up their savings by £1,987.
A first-time buyer couple who both make use of the Help to Buy Isa and save the maximum allowance of £200 each per month could reach the £7,949 target in 20 months, compared with 25 months if they tried to save the whole £9,936 at the same rate without Government support.
By each contributing the maximum £1,000 when they first open an individual Help to Buy Isa, they could take another five months off this, reducing their total time saving by ten months. This would leave them needing just 15 months to hit the average deposit figure. If they started saving in October 2015, they would hit their goal by December 2016. MAB’s calculations do not account for interest accrued on the funds held in the Isa.
MAB head of lending Brian Murphy says: “Help to Buy’s importance to easing affordability pressures is plain to see: the average deposit of those using the scheme remains far below those found in the wider marketplace, giving first time buyers access to the housing market in a far shorter timescale than would otherwise be possible without parental help.
“The Help to Buy Isa will provide a further boost to first-time buyers, with the government effectively pledging to contribute a fifth of their deposits up to £15,000. By paying a modest 10 per centof their savings after tax into a Help to Buy Isa, a couple would be able to reduce the time they need to save for a deposit by as much as nine months.
“The arrival of the new Isa scheme will be another step towards make homeownership a realistic goal for first-time buyers on average incomes.”