In their latest press release Zopa announced the results of their most recent survey, where it was evident that Peer to Peer investment is proving popular for first time buyers looking to save up for their first deposit faster than with a traditional savings account.
Zopa's research found that almost two thirds of customers it surveyed aged 18-40 who don't own a home are using the lending service to help raise a deposit and over half expect it to reduce the time it will take to reach their target.
Over a third (34%) of those surveyed said it will shave more than a year off the time until they can buy and a further 21% say it will reduce their waiting time by six months. With house prices rising on average 4.6% every year according to the July Land Registry figures, this can be an important deciding factor on getting the home people want at an affordable cost.
One in five (22%) is hoping to buy in less than a year, whereas almost half (47%) hope to purchase a home between one and three years’ time.
Of those looking to buy, over half are cutting back on clothes and other purchases and more than two out of three people are eating out less, going on fewer or cheaper holidays and choosing cheaper options for household essentials to boost their savings. In contrast, one in four people are making no lifestyle changes at all.
Of those who weren’t saving for a deposit, a third (33.8%) said it was because house prices are too high and almost a quarter said they have other saving priorities at present.
Alarmingly, over 40% of people are aiming to save a deposit of over £40,000, but this rose to over half (55%) of Londoners who are waiting to buy. This stands in stark contrast to those who brought ten years ago, when only 2% of savers aimed for a deposit pot of £40,000 or above.
Less than one in five (18%) are receiving help from government schemes, such as help-to-buy, but over half of current first time buyers (55%) expect to receive no financial assistance from their families in reaching their deposit target.
For those first-time buyers that have had financial assistance, the size of parental contributions is actually getting larger as deposit amounts increase. For those who brought their houses more than ten years ago, only 8% of parental contributions were over £45,000. This percentage rises to 28% for people who brought less than a year ago.
Zopa’s executive chairman and co-founder Giles Andrews said, “Buying a home is a major milestone in many people’s lives and saving a deposit is getting harder each year as prices and the amount required increases. I’m proud that Zopa is helping first time buyers reduce the time it takes to own a home by allowing them to grow their money faster with better rates. From April 2016 we will be able to help millions of people keep more of their interest as P2P lending becomes part of the tax free ISA wrapper and personal savings allowance.”
[Average house price for England and Wales is £183,861 according to July Land Registry data.]
Zopa surveyed 1329 customers aged 18-40 during July 2015.