Deposit amounts rather than property prices are shaping the housing market for first-time buyers in Edgware.
When we talk about the housing market, most of the noise focuses on property prices, inflation (or the “cost of living”), and interest rates, whether it’s a “good time” to buy or sell, etc.
And this is natural, because these conversations (or even thoughts) tend to be egocentric – in the sense that they tend to be from the point of view of ‘what can we buy,’ ‘how much can we sell for….’
This can often lead to a focus on the lower end of the market – typically the ‘First-Time Buyer’ market – as without first-time buyers, there tends to be nobody around to kickstart chains. Not en masse, in any case.
Which is why we, the property industry press and even the mainstream media – which, by proxy, usually means the general public – often concern ourselves with what property values are doing ‘lower down’.
Nevertheless, there is a new reality beginning to manifest – quietly, in many ways, perhaps just murmuring in the background, but starting to rumble consistently.
It is not about what people can afford. It is more a case of how they’re starting the process.
Fresh data from Moneyfacts lays out some useful numbers to back up what many of us estate agents on the ground are already seeing: that the first-time buyer housing market is increasingly split by deposit size.
Two first-time buyers, two quite different journeys
According to Moneyfacts, most first-time buyers are still looking to purchase as soon as they reach a minimum or near-minimum deposit amount, on high loan-to-value mortgages:
- Around 30% are looking at 90% LTV deals
- Another 12% are searching for 95% LTV products
That means deposits of roughly 5–10%, which in today’s market is already a stretch for many.
What is interesting is that people tend to assume this is normal – that this would make up a vast majority of first-time buyers. And that is simply not proving to be the reality.
Their figures show that a staggering 31% of first-time buyers are seeking mortgages with an LTV below 75% – or in other words, these first-time buyers have deposits of at least 25%.
On an average UK home, this is close to £70,000 upfront. On an average property here in Edgware, it’s over double that, at £142,379 – this based on our average property values of £569,515 (according to Rightmove insights).
These higher-deposit buyers are not “better” buyers per se; they are simply starting from a different place, often with family help, an inheritance, or long-saved money behind them. But, no doubt, there are practical advantages that come from having a larger deposit available – both to the seller, as well as the buyer.
Why deposit size matters
The difference does not just affect the size or location of the property these buyers might choose to purchase. Having a higher deposit at their disposal gives lenders more confidence and reduces – although doesn’t eliminate – the risk of adverse or problematic surveys stopping the sale in its tracks.
From a buyer’s perspective, it also sets a more promising path for them moving forwards.
Moneyfacts’ figures show that buyers with smaller deposits can end up paying around £170 more per month than someone borrowing the same amount with a larger deposit, based on current available mortgage products – and here in Edgware, based on the higher average mortgage amounts these buyers would have, we can expect the difference to be much more than that.
This is simply because the system prices in risk differently, depending on whether a buyer is taking a lower or higher ‘loan to value’ (LTV) on their mortgage.
Over the course of a fixed term, that extra monthly spend adds up quickly: Even an extra £170 per month is over £4,000 more over 2 years, and over £10,000 over a 5-year term.
It starts to sound like a lot as time compounds. Then consider the broader implications for these two different buyers: it shapes how comfortable they are once they have moved in, and it affects how much more they can save over the next few years to put toward the next house move.
The higher-LTV homeowner is more stretched monthly, can afford to spend less on upgrades and maintenance, and is less able to make a jump as far up the ladder in their subsequent moves, compared to their lower-LTV peers.
Movers already understand this instinctively.
This matters to homeowners in Edgware looking to sell because, as a direct consequence, first-time buyers’ attitudes are changing. They are moving on from the accepted wisdom of the past – and many are biding their time until finances look more favourable.
- 31% wait until they have at least 25% deposit before making their next move
- A further 16% look to move with around 15% deposit
In plain English: even if buyers hold out to save up a 15% deposit, it means people are waiting longer, building more equity, and being far more cautious about timing.
Whilst there is a danger that, in the short term, it creates a shortage of available first-time buyers to kick off chains, from my perspective it shows neither panic nor complacency; rather, it signals pragmatism and, frankly, maturity of thought amongst this younger generation.
Buyers and sellers alike are adjusting to a market where borrowing costs matter more than they did a few years ago, and where a strong equity position brings flexibility, confidence, choice – and better, more manageable long-term outcomes.
What it means for the local Edgware property market
Here in Edgware and the surrounding North London area as a whole, it all matters for a few reasons:
- Those first-time buyers who plough ahead as soon as the 5%-10% deposit is saved are paying a hidden premium – perhaps simply because they do not have access to the family wealth or inheritance that their fellows have.
- Others are able to move faster, negotiate harder, and absorb rate changes more comfortably
- Homeowners are thinking more carefully about when to move, unable to rely on first-time buyers to kickstart the process in the same numbers they once did, whilst this saving pot amongst those buyers builds up.
Those buyers who do wish to go ahead on a lower deposit (and higher LTV) can still do so, and indeed should still do so, as long as they do so fully aware of the downsides, and conversely the upsides of waiting even just a year or two longer in order to put a bit more money in the bank.
In the meantime, despite what goes some way to explaining a shortage of first-time buyers, the market here is very much still active. Homes are still selling. People are still moving on with their lives. There are 474 properties currently for sale in Edgware alone – of which 84 (or 17%) have only just listed within the past two weeks (data from Rightmove).
The market is busy, and it is active.
But in the entry-level to mid-section of the market in particular, it is becoming increasingly clear that deposits, not just prices, are shaping choices and outcomes for local buyers.
A final thought
There is no single “right” way onto the property ladder, and high-LTV mortgages still play an essential role – especially for younger buyers and those without financial backing.
But we do need to be honest about what is happening.
We are moving towards a two-speed market – if indeed we are not already there – where the starting position of the buyer plays a much bigger influence on their long-term property journey than for generations past.
My job, as always, is to help people navigate whatever their reality is with clear advice, local knowledge, and no unnecessary sales talk – whether they are purchasing their first flat with a large deposit to keep their mortgage low, or stretching themselves as far as they dare for the three bedroom home they intend to live in for another two decades after; and whether they are selling a family home, or simply trying to understand where things stand for them and what options they have.
If you are buying or selling a property in Edgware and are unsure what your own position really looks like in today’s market, a friendly conversation is always the best place to start – and that is what I’m here for.
Get in touch anytime you like for a chat or for advice on how to make the best move for you.