Aspiring homebuyers feel that the cost-of-living crisis could hinder their ability to afford to purchase a property, with many relying on privately rented properties for longer, Paragon Bank research has found.

A survey of over 2000 people who currently live in privately rented homes found that just over one third (35%) are actively saving to buy a home, with the majority of these (73%) in the process of saving for a deposit.

When asked to consider the impact of the cost-of-living crisis on a range of different financial behaviours, over half of these aspirational homebuyers (56%) expressed reduced optimism in their capacity to save for a deposit, either responding that they are only slightly confident or not confident at all.

As part of the research, undertaken by Paragon Bank, aspiring homebuyers were also asked when they expect to buy a home, with the ability to save for a deposit appearing to influence the amount of time tenants anticipate remaining in their rented home.

The majority, four in 10, of those who feel it is unlikely that their saving will be impeded predict being ready to purchase in the next one to two years, whereas a similar proportion (44%) of those who are not confident in raising the funds for a deposit expect to buy a home within three and five years, the most common timeframe amongst this cohort. 

Over a quarter (28%) of those who are confident in their deposit raising ability expect to buy a home within the next six to 12 months, falling to one in 10 amongst those who feel their capability will be compromised.

Richard Rowntree, Managing Director for Mortgages at Paragon Bank said: “Our latest tenant research confirms the logical expectation that the pressure placed on household finances will limit the capacity for some people to save for the deposits necessary to buy their own home. 

“This has implications for the private rented sector because a sizeable proportion of these aspirational homebuyers will remain in rented properties for longer while they battle the rising cost of living to put aside funds needed to secure a mortgage. In turn, this will place further pressure on the supply of rented homes which is already surpassed by demand, exacerbating rising rents and limiting choice for tenants.

“This helps to reinforce my view that different housing tenures are inextricably linked, with the population moving between them influenced by their needs at the time. As a result, each tenure should be viewed equally, and policy should reflect this to minimise any barriers to much needed investment.”    

The specialist lender’s study also found that over a third (37%) of buyers aim to put up 10%, making it the most common deposit size. Just under a quarter (23%) already have the deposit money while the remaining 4% are already in the process of purchasing a property.

For media enquiries contact:

Jordan Lott
Media Relations Manager
Paragon
Tel: 0121 712 2319
www.paragonbank.co.uk 

Notes to editors:

Paragon surveyed 2081 renters during September 2022.
 

Paragon lends to private individuals and limited companies and has mortgages suitable for single, self-contained properties, as well as HMOs and multi-unit blocks. Paragon can accommodate higher aggregate lending limits and more complex letting arrangements including local authority leases and corporate leases along with standard ASTs.

Paragon introduced its first product aimed at the professional property investor in 1995 and is a member of UK Finance, the Intermediary Mortgage Lenders Association (IMLA), National Landlords Association (NLA) and the Association of Residential Letting Agents (ARLA). 

Paragon Bank PLC a subsidiary of the Paragon Banking Group PLC which is a FTSE 250 company based in Solihull in the West Midlands. Established in 1985, Paragon Banking Group PLC has over £13 billion of assets under management and manages over 450,000 customer accounts.

Paragon Bank PLC is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Registered in England number 05390593. Paragon Bank PLC is registered on the Financial Services Register under the firm reference number 604551. Registered office 51 Homer Road, Solihull, West Midlands B91 3QJ.