We know they are the lifeblood of the sector, they help keep everyone else moving, so if they stop buying, then the rest of the market will stall too.
The government’s long-term mortgage announcement with its commitment to support this group of would-be purchasers was therefore encouraging.
It acknowledged the challenges they face and presented an ambition to level the playing field for homebuyers and it’s definitely got people talking.
But, with no detail of how the proposed scheme of providing 95 per cent mortgages would work and little engagement from government with the industry, it’s very difficult to comment on whether it’s what we need right now or if there is a more straightforward and quicker solution to the challenges first-time buyers currently face.
Difficult market
The biggest hurdle for those starting out is the lack of higher loan to value (LTV) lending products. This is a topic which has been discussed endlessly since March and while we’re starting to see some positive signs, with a few more lenders offering 90 per cent LTV for shorter stints (ourselves included), it’s far from ideal for brokers and their clients.
Buying a house has enough anxiety attached without not knowing if the deal you were considering last week is still available.
Sadly, with so few lenders prepared to venture into this space, capacity is a major concern.
With competition rules preventing lenders from sitting down and agreeing an approach to provide better outcomes for customers, these limited time pulses look set to continue.
Prices and affordability
Another barrier is house prices themselves. A survey carried out with prospective first-time buyers by Accord Mortgages and Yorkshire Building Society found a third of those expecting to buy within the next three years were worried about the cost of housing in their desired area.
It’s likely we’ll see movement in the market once the stamp duty holiday ends next year, but until then, pent-up demand and a change of living preferences is causing prices to rise.
Affordability is also a significant issue. And finally, changes to criteria as a result of the pandemic means for many first-time buyers, the goalposts are moving.
Many of the changes are to help improve capacity and will be temporary, but with so much uncertainty and employment so impacted by Covid-19, it’s likely the number of more complex cases will increase, which will undoubtedly deter many potential applicants.
Offering support
Despite these challenges, there are opportunities. Advice has never been so vital, with 92 per cent of our survey respondents saying they would be looking for guidance when making a home purchase.
Brokers have the chance to secure new business which, if handled well, could be business for life, so there is a real incentive to reach out, offer the best support and ensure you have a robust client retention strategy in place.
And, if you have the benefit of a broker on your side, your chances of securing the best deal when it does become available is much greater.
Since March, our regular windows of higher LTV lending exclusively for those making that first purchase have resulted in more than 4,500 first-time buyers achieving their ambition to own their own home.
Aiming higher
But of course there is more that can be done.
And if the prime minister wants to understand the market and the possibilities, then our industry is willing to join the conversation and work together to find innovative solutions.
Over the last few months, we’ve learnt that collaboration is critical to success and so I, as I know a number of my peers across the sector would join me in saying, would be happy to join that dialogue.
Let’s look at what we can do in partnership to help offer practical support for first-time buyers, increase capacity and ensure we have a housing market which is accessible, sustainable and robust enough to survive the next challenge, whatever that may be.
