Equity locked in homes plummets in a decade due to rising age of first-time buyers and slow house price growth
Householders have less equity in their homes than their equivalents before the financial crisis.
Analysis by insurer Royal London found borrowers aged 51 to 55 were taking out mortgages worth, on average, up to 30 per cent of the value of their homes in 2007, leaving them with at least 70 per cent equity.
By 2018, the average size of a mortgage for borrowers of the same age had risen to between 50 and 75% of their property value
But, by 2018, the average size of a mortgage for borrowers of the same age had risen to between 50 and 75 per cent of their property value, leaving them with as little as 25 per cent equity.
Meanwhile, in 2007, most 31 to 35-year-olds were able to find a deposit of at least 25 per cent, but, by last year, most households in this age bracket were borrowing more than 75 per cent of the value of their home.
Experts say the rising age of first-time buyers, plus the slow in house- price growth since the financial crisis, has hampered households’ ability to build up equity in their homes.
This a blow for borrowers because the more equity you have in your home, the cheaper the mortgage deals you can get.