New research from the Council of Mortgage Lenders reveals that up to half of all young first-time buyers may be getting help from their parents to fund their deposits.

Much of this help may itself be equity from housing, being used to help a new generation onto the housing ladder.

The CML's research estimates the level of savings that first-time buyers could reasonably have accumulated, and compares this with their actual deposits. Over the past decade, the proportion of first-time buyers whose deposits were higher than their plausible savings has jumped from under to 10% to nearly 50%.

The CML sub-divides first-time buyers into four groups:

• ‘Unassisted’ first-time buyers aged under 30, using only their own savings to fund a deposit
• ‘Assisted’ first-time buyers aged under 30, with additional funds for a deposit on top of their own savings
• ‘True’ first-time buyers aged over 30 (whether assisted or unassisted)
• ‘Returners’ aged over 30, who have previously been home-owners but are classified for survey purposes as first-time buyers because they have taken a break from home-ownership.

The profiles of these groups are quite different. Broadly:

• Unassisted under-30s tend to have high incomes, but buy properties with low purchase prices. They have low deposits, high percent advances and borrow a medium-level income multiple.
• Assisted under-30s tend to have low incomes, but buy medium-value properties with high deposits and high income multiples, and low percent advances.
• Over-30 true first-time buyers tend to have high incomes, high deposits and buy high-value properties. They borrow on medium-level percent advances and income multiples.
• Returners tend to have medium-level income, high deposits and low percent advances. They buy high-value properties on medium income multiples.

Essentially, what this shows is that first-time buyers are not a homogenous group. The lending risks they present to lenders are very different, depending on which category they fall into. Lenders assess each application on its own merits, to manage the risk in each case.

The author of the research, CML senior statistician James Tatch, concludes: "For some home-owners, helping out their children with a mortgage deposit may represent an efficient use of funds, in the light of low returns on alternative investments. For others, the assistance may not represent an investment decision so much as a case of the family pulling together to enable the younger generation into home-ownership."

"We do not know what effects any of this will have on borrowing patterns in the future. While older generations are able to raise funds from converted equity and other sources, the assisted route remains a viable option for many young first-time buyers with willing families. But if for whatever reason these sources dry up, the importance of unassisted first-time buyers is likely to increase, and the affordability constraints they face will be brought into sharper focus."

To see the full report, view the .pdf file - Will the real first-time buyers please stand up?