The property ladder – where should you be by now?

Bricks and mortar, the seemingly inevitable goal of Brits of all ages, incomes and circumstances.

It’s been a unstable 2019 for property so far with few chances of calm.

One of the key benchmarks, show that nationwide, house prices appear to have risen by just over 1 per cent in April compared with a 1.3 per cent fall in March, shown on the latest Halifax House Price Index.

Average house prices are now £236,619, up £154,663 this time ten years ago at the height of the financial crisis.

It’s fair to say that the rollercoaster numbers, particularly the seeming rise in the midst of ongoing Brexit uncertainty, have surprised many experts in the field.

“The blistering volatility of this index has returned as the Halifax house price weather vane spins itself into a frenzy once more,” says Lucy Pendleton, founder director of independent estate agents James Pendleton.

“The index has already come under scrutiny this year after months of erratic monthly growth figures. These can be more sprightly than the smoothed annual and quarterly numbers, but even so, they’ve been turning heads with the extremes with which they have been moving.”

Cue the standard chat about “true” values, when to invest and definitely whether to invest at all.

Except that, for most of us, getting onto and moving up the housing ladder is about trying to make sure our home gives us the things we need at the right times of life without losing us a packet as we shift, or not, along the chain.

And that is a truly difficult series of calculations to gauge as we quietly try to work out how on earth everyone else is managing it.

So if, and these days that’s a big if, you’re sold on the inherent value of owning property, how do your circumstances stack up against everyone else?

In your twenties

If you’re buying, just moved in, or have already been a homeowner for years in your twenties, you probably already know you’re light years ahead of most of your peers.

But the chances are you’ve borrowed a lot to get there. In 2018, 46 per cent of borrowers aged 18 to 25 borrowed more than 85 per cent of the value of their home.

“In the last ten years, the lie of the land has changed significantly for borrowers as a result of the financial crisis, changes to the way mortgage lenders assess affordability and rising house prices,” says Becky O’Connor, personal finance specialist for mutual insurer Royal London.

“For those who already own their home, house price inflation is a windfall, giving them a bigger deposit when they remortgage and enabling them to access lower mortgage rates.

But those still waiting to buy a home when house prices rise must stretch to a higher loan-to-value (LTV) initially and then face the likelihood of being stuck paying higher rates on the higher LTV for longer if house price growth remains relatively flat.

Now that house price growth looks to be levelling out, it could potentially take these younger, more stretched borrowers longer to get their LTV level down than was the case for homeowners who got on the ladder some years ago and benefited from big house price gains.

In your thirties

It’s one thing to see a whippersnapper being handed the keys to the home next door, but are they mortgaged to the hilt or cash buyers?

Depending on who you listen to, the average age for a first-time buyer is now 34, reflecting the dramatic rise in property prices in the last decade or so.

More data from Halifax suggests each of those first-time buyers has saved up a significant deposit of £33,000 to get on that first ladder rung. That’s almost 60 per cent more than the average deposit just as the financial crisis struck in 2008.

The figures vary dramatically, from a typical deposit of £110,000 for a first home in London to one of just £16,000 in parts of Wales. But you’re still only looking at 15 per cent of today’s purchase price.

But this decade is a tale of two halves. New analysis of FCA data on new mortgage sales by Royal London suggests that borrowers aged 36-40 and above, typically put down a deposit of at least 25 per cent – a “tipping point” for access to lower mortgage rates.

In your forties

With the average second stepper moving from a starter to a family home now aged 42, you’re likely to have built up a bit more perceived equity in your home. Though your second home was likely to be around £75,000 more expensive than your first according to analysis of land registry data by House Simple, historical movement in the property market means your home loan is now “only” worth 50-75 per cent of the property value.

That said, in the decade since the financial crisis the number of borrowers in all age brackets with small deposits of less than 25 per cent has crept back up to 2008 levels – the days of 100 per cent mortgages.

In your fifties

The data also suggests that the majority of homeowners aged 51 or over who take out new loans are taking out a mortgage for less than half the value of their home. But the time you’re in your late fifties, you’re probably borrowing a maximum of 30 per cent of the value of your home. Some have already cleared their debts.

But if you are borrowing, you’re likely to be on the best interest rates. Mortgage rates fall for borrowers as their LTV decreases and they own more of the equity in their properties.

Having probably been on the ladder for 20 to 30 years, your progress has depended on three main factors, Royal London asserts.

First, when house price growth is faster, borrowers move up the housing equity ladder more quickly. Second, those with shorter mortgage terms and those who make overpayments that reduce the capital balance will see the proportion of their borrowings in relation to their property value decrease more quickly.

Finally, a proactive approach to property values means that borrowers who can respond to having more equity in their properties have remortgaged, borrowed more and moved up the chain.

In your sixties and seventies

However, the proportion of borrowers above retirement age borrowing 30 to 50 per cent of their property’s value has been steadily rising since the financial crisis, with 27 per cent of 66-70 year olds now taking out new mortgages with an LTV between 30 and 50 per cent, up from 21 per cent in 2009.

Even among new mortgage applicants in their early seventies, more than a quarter are now borrowing between 30 and 50 per cent of their home’s value, even at a time when their opportunities to earn are falling away.