Help to Buy 2 will shrink more deposits to less than £10k
Up to 665,000 homebuyers in five English regions and Wales could be able to buy a property with a deposit of less than £10,000, as a result of the mortgage guarantee part the government’s Help To Buy scheme.
On average, a 5% deposit in Yorkshire & Humber would be the cheapest anywhere in England at £8,129, based on a property selling for the region's current average asking price of £162,588, according to property website Zoopla.
In comparison, a 20% deposit (what many borrowers have had to put down to secure themselves a decent mortgage rate prior to the introduction of Help to Buy 2) would have cost them £32,518 in the Yorkshire & Humber region - £24,388 more than a 5% deposit costs.
The next cheapest 5% deposit would be in the North East, at £8,876 on average, followed by £8,903 in the North West.
Unsurprisingly, buyers in London would still have to fork out the most for a 5% deposit at £16,103 - almost twice the size of the average deposit required in Yorkshire & Humber. But had those London buyers had to put down a 20% deposit, they would have had to fork out an additional £48,309.
Zoopla.co.uk spokesperson Lawrence Hall said: "Help to Buy 2 won't just narrow the aspiration gap, it could help close it entirely. House prices are beginning to rise, savings rates are low, inflation is consistently above target and wage increases aren't keeping pace. It makes saving for a 20% deposit on a property very difficult for many.
"Even people with well-paid jobs are being priced out of the market. The new scheme helps address that problem, making the first rung of the ladder much lower for would-be buyers who want to get a foot on it. People everywhere need help. Help to Buy can make housing market a place for the many, not the few."
The effect of Help to Buy 2 on home deposit savings by region
Avg. asking price (up to £600k)
Avg. desposit saved under Help to Buy 2 (15%)
Avg. deposit required under Help to Buy 2 (5%)
South East England
East of England
South West England
North West England
North East England
Yorkshire & The Humber
Source: Zoopla.co.uk (October 2013)
An increase in the general level of prices that persists over a period of time. The inflation rate is a measure of the average change over a period, usually 12 months. If inflation is up 4%, this means the price of products and services is 4% higher than a year earlier, requiring we spend and extra 4% to buy the same things we bought 12 months ago and that any savings and investments must generate 4% (after any taxes) to keep pace with inflation. Since 2003, the Bank of England has used the consumer prices index (CPI) as its official measure of inflation (see also retail prices index).