Tenants in England are paying private rents averaging £700 a month, according to official figures this week. Yet with interest rates at super-low levels, £700 a month is enough to meet the monthly payments on a £190,000 mortgage (assuming a 30-year term and 2% rate). Given that the average house price in the UK is £219,000, why aren’t more young people buying rather than renting?

The reality is that the absolute level of house prices, while very high in historic terms, is not the biggest problem; it’s finding the money for the deposit that holds most people back. And last week that problem got a whole lot worse.

Nationwide building society, one of the biggest lenders in the UK, announced it was tripling the minimum deposit that first-time buyers put down. It’s a body blow for young buyers.

Let’s assume you are outside London and the pricier parts of the country, and you can find an apartment or house at around the £200,000 mark (for example there are 400 properties currently listed in Manchester at between £190,000 and £210,000). If you were able to meet all of a lender’s affordability tests, with a bit of luck you might be offered a 95% mortgage (ie: 5% deposit only).

It would mean they advance you £190,000, and you put down £10,000. For many young adults, £10,000 is a big ask. Remember, there’s also the fees for moving in, furnishing, etc, to cover. You probably need a minimum of £15,000 to buy that home. Even if you are a couple, it’s still a lot of money to save while you’re also paying rent, transport to work costs and so on. But not impossible.

But it looks impossible now. Nationwide was one of the lenders offering first-time buyers a maximum 95% mortgage. Now it has cut that to 85%. It sounds relatively innocuous until you follow the maths. The deposit needed for that £200,000 home in Manchester is now £30,000. With move-in costs added, our young couple need to save £35,000. Most other lenders have withdrawn from the 90% market too.

It’s required at this point to address all the grumpy middle aged people who will tell you that millennials spend all their money on iPhones and lattes. Let’s say our young couple forego a daily Starbucks for the next two years, and buy a basic £100 phone rather than a £1,000 Apple model. I calculate that saves them around £2,000 a year. There’s no denying that would help towards their deposit, and is the right thing to do. But it doesn’t solve the problem.

One of the things about 95% mortgages is that they democratise the property market. By steeply raising the minimum deposit, lenders are effectively saying they will only lend to young adults who have well-off parents. The bank of mum and dad has to step in to fund the deposit, and if you weren’t born into a family with assets, then bad luck. It’s one of the reasons why BAME homeownership is so low.

As we highlighted in Guardian Money last week, black Africans have the lowest level of homeownership in the UK, at around 20%. Black African households also have just 10p of savings and assets for every £1 of white British wealth, according to the Runnymede Trust. How do you access the bank of mum and dad, when they had little chance to build up any assets themselves?

There is another worrying issue that will build up while the banks and building societies require high deposits. As mortgage broker Ray Boulger points out, “Until lenders return to the 95% LTV market borrowers who don’t have family help are limited to using the help-to-buy scheme. As this is only available on new build properties there is a serious danger first-time buyers and others will be tempted to overpay for a new build property, simply because it is the only way they can buy a new home and they don’t know how long it will take before the situation improves.”

If you are a young adult hoping to buy your first home, it probably makes sense to heed Boulger and maybe sit this out for a while. The reason why Nationwide has raised its minimum deposit is that it fears house price falls. It doesn’t want to lend £190,000 against that £200,000 home in Manchester if it thinks the property is only going to be worth £180,000 in a year’s time.

There’s a tug-of-war going on in the property market right now between the boosters, who say everything is buzzing since the reopening, and those warning that prices could fall steeply this year.

I’m inclined to listen to Savills, whose research team has one of the better records on price forecasting. Last week it revised its forecasts downwards, and is now predicting a UK-wide house price fall of 7.5% in 2020, with a bounceback in 2021 of 5%. That suggests it makes sense not to buy this year, to save more, and wait for the return of 90% and 95% mortgages next year. And meanwhile, yes, cut your latte and iPhone habit.