Struggle to save for house deposits forces half of young adults to live with parents

Over half (58%) of young adults surveyed by the mortgage broker, Trussle, revealed that they still live with their parents as financial circumstances prevent them from moving out and saving for a house deposit or being able to afford to live on their own.

Half (50%) of those aged 18-34 Trussle surveyed said they were living with their parents in order to save for house deposit, and 59% revealed the process of saving to get onto the housing ladder was causing them stress. Not only this, but 36% of this age bracket admitted that they lived with their parents because they simply could not afford to live alone.

At a staggering 81%, the North East of England had the highest number of young adults still living with their parents, while London also had a high number at 74%. Meanwhile, Yorkshire and Humber had the lowest numbers, with just 22% of under-35s living with their parents.

For those looking to save for a house deposit, time is running out to open a Help to Buy ISA, which allows first-time buyers to save tax-free for their first home and benefit from an additional 25% Government bonus on their savings (up to £3000). Savers can make an initial deposit of £1,200 followed by monthly additions of £200 and the bonus kicks in once the total balance is at least £1,600. Applications to open a Help to Buy ISA end on 30 November, and to find out more about these ISAs read our Help to Buy ISA guide.

Parents are not just helping their children onto the property ladder by letting them continue to live at home, but also lending them money to buy a property. Earlier this week Moneyfactscompare.co.uk reported on figures recently published by Legal & General and Cebr, which showed that this year, parents are on course to contribute an average of £24,100 to help their children buy their first home. If this figure proves correct, parents will loan a total of £6.3bn this year compared to £5.7bn loaned in 2018 – a 10% increase –which would make the bank of mum and dad the 11^th largest mortgage lender in the UK.

Ishaan Malhi, CEO and founder of Trussle, said: “The fact that so many young people can’t afford to move out of their parents’ homes in fear of not being able to get onto the property ladder is alarming.

“Too many of them are forced to put their lives on hold in a bid to get onto the property ladder. At Trussle we’re fighting for fairer mortgages to ensure that the process is transparent and simple. And in turn, a process that will help young people feel empowered when embarking on what should be an exciting, hassle-free journey of buying their first home.”

“Getting a mortgage is often one of the biggest financial and emotional commitments a person will make in their lives and ensuring the industry is supporting young people as they take this step is crucial.”

While young first-time buyers are still struggling to get onto the housing ladder, last month data from UK Finance showed that the number of people buying their first home was up in all regions across the UK. In addition to higher numbers of first-time buyers getting onto the property ladder, they were able to benefit from rates in the high loan-to-value (LTV) tiers falling, meaning that rates for 90% and 95% LTV mortgages were becoming much more affordable. In fact, research carried out by Moneyfactscompare.co.uk in May found that the average two-year fixed rate 95% LTV mortgage had fallen by 2.08% in the last five years, with the average rate during that month at 3.25%. 

Saving for a mortgage deposit is clearly still a struggle for many first-time buyers, however there are some steps that can make the process easier. Keeping up-to-date with the house prices in the area you want to buy, for example, will give you a good idea of how much you need to save in order to afford the deposit on the type of property you want to buy. In addition to this, choosing the right savings account will help to increase your saving potential, for example both the Help to Buy ISA and Lifetime ISA offer a 25% Government bonus. To find out more read our guide on how to save the deposit for a house or flat.