According to a new study, putting down only a five per cent mortgage deposit currently makes more financial sense regarding the potential annual return compared to investing in a one-year fixed ISA.
While it might seem like the tiniest of margins in terms of homeownership, the new research showed that a five per cent deposit would still have yielded a greater investment return over the last year in comparison to a one-year fixed Individual Savings Account, despite ISAs being specifically created to boost a person’s savings pot.
During the course of last year, UK average house prices have spiked by 9.8 per cent, rising from £268,115 to reach £294,329. This hike has happened despite mortgage rates increasing and house price growth rate cooling. Only a year ago, a five per cent deposit required home buyers to make a £13,406 deposit to secure a mortgage. Now, in 2023, this five per cent investment would have risen to a value of £14,716, offering a return of £1,311.
By way of contrast, making the same investment of £13,406 into a single-year fixed ISA at an average interest rate of 0.43 per cent would have returned £13,463 in total over the past year, representing a boost of only £57 on the initial investment.
UK savers often consult financial experts for investment advice in Shropshire, Worcestershire and other counties. As independent financial advisors (IFAs), wealth managers have the experience to offer unbiased advice on the most lucrative options available for investment that effectively balance risk and return.
