New research reveals that nearly one in five Gen Z adults in the UK are not saving anything for a first home deposit, which poses significant implications for the housing market and mortgage lending. Despite almost half of this demographic expecting to purchase their first home before turning 30, financial pressures are hindering their ability to save.
TL;DR: 18% of Gen Z adults aged 18 to 29 are saving nothing for a house deposit; this trend highlights the financial challenges facing young first-time buyers.
Why Are Young Adults Struggling to Save?
Research conducted by Barratt Homes indicates that 18% of individuals aged 18 to 29 who have yet to enter the housing market are currently not setting aside any funds for a deposit. This lack of savings is concerning, especially as 48% of respondents believe they will buy their first property before age 30. The financial market for young adults is increasingly challenging, with many facing rising living costs and stagnant wages.
What Are Young Buyers Doing to Save?
Among those who are saving, the average monthly contribution is £340. However, the amounts saved vary widely: 20% are saving between £100 and £299, while another 20% save between £500 and £699. Many are resorting to various strategies to boost their savings, including taking on extra shifts (24%) or working a second job (21%). Additionally, 38% are reducing non-essential spending, and 19% are choosing to live with parents longer to save on housing costs.
What This Means for First-Time Buyers and the Mortgage Market
The findings underscore a significant challenge for first-time buyers in the UK. With 11% of respondents expressing doubts about their ability to purchase a home at all, the market may see a shift in demand dynamics. Young buyers are increasingly reliant on dedicated savings accounts, with 49% using this method, while others are exploring cashback apps (20%), selling unwanted items (19%), and investing in stocks (16%). This trend may prompt lenders to rethink their mortgage products to better accommodate the needs of younger buyers.
How Will This Impact Mortgage Lending?
The lack of savings among Gen Z could lead to a tightening of the mortgage market as lenders become more cautious. With many young adults unable to meet traditional deposit requirements, there may be a rise in demand for lower deposit mortgage options. This shift could influence current mortgage rates and the types of products available, making it essential for borrowers and brokers to stay informed about evolving lending criteria.
Frequently Asked Questions
What are the average savings amounts for Gen Z buyers?
The average amount saved by Gen Z buyers is £340 per month, with many saving between £100 to £299 or £500 to £699 monthly.
What strategies are young adults using to save for a deposit?
Young adults are taking on extra shifts, working second jobs, cutting non-essential spending, and living with parents longer to save for their home deposits.