As many as 1.1 million would-be first time buyers have been forced to hold tight according to new research from Abbey Mortgages.
The study shows that 67 per cent of all potential first time buyers are being forced out of the market due to tightening lending criteria and are having to arrange alternative living arrangements.
The research from Abbey coincides with a recent study by Prudential which found that more than 80,000 UK households have three generations all living under the same roof. As the credit crisis takes hold, Prudential predicts that the number of families forced to live like this will grow.
Pensions are becoming less fruitful and reliable, causing 10 per cent of elderly relatives to live with their children, and, as pension
funds dwindle, mortgage
rates are rising, forcing first time buyers out of the market and, according to Prudential 8.3 million UK adults have found themselves living with their grown up children.
According to the research, parents are concerned that financial pressures on their children are set to get worse. The study found that 74 per cent of adults with children are worried their children will be unable to buy a property and will live at home until they can afford a deposit.
The occurrence of three generations cohabiting is set to continue as a cycle begins, managing director of Prudential Retail Life & Pensions, Gary Shaughnessy, explained: "The phenomenon of the 3G family does not come without a cost.
"For the middle generation the financial drain of providing support for both the younger and older generations could have a detrimental impact on their ability to save adequately for their own retirement. In turn, they too may eventually become financially reliant on their children in old age."
According to Abbey, the 1.1 million would-be first time buyers who have been forced to postpone have a collective deposit amassed of more than £31 billion, which, Abbey comments, if invested in the right places could gain an extra £2 million in interest.
Phil Cliff, Abbey Mortgage director, said: "Those delaying purchasing a home would benefit greatly from moving their deposits into high interest saving accounts
However, despite the apparent first time buyer doom and gloom, some lenders beg to differ.
Speaking at Barclays Global Retail & Commercial Banking seminar yesterday, chief executive, Frits Seegers assured investors Barclays is in a strong position to gain new mortgage business.
"At the moment, credit risk is a topical issue. Many of our businesses are cynical and we watch the economic outlook carefully," he said.
"We do not claim to be sheltered from the economic cycle. I will say though this, that we saw the storm early and adjusted our business practices.
"For example, in the UK we reduced our exposure to leveraged finance for financial sponsors by a quarter over the last 18 months; we also kept our exposure to commercial property ad mortgage LTVs at a low level," Mr Seeger continued, raising hope for first time buyers that other lenders may also have used such damage limitation measures.
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