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First-time buyers need propping up from all players in the housing market – Bamford

by: Patrick Bamford, head of international business development at Qualis Credit Risk, part of AmTrust International
  • 10/01/2022
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First-time buyers need propping up from all players in the housing market – Bamford
Seeking an early heads-up on just what a new year will hold for the mortgage market is a ‘fun game’ to play in January, especially in an industry which has so much data to work through.


Of particular interest is how purchase activity might be impacted, and how first-time buyers might view the current market, given they are now the only group benefiting from any kind of stamp duty ‘discount’. 

Recent data from Twenty7Tec appears to suggest that searches for first-time buyer mortgages dropped a lot in December, after a record low in the month previous. While the number of searches for 95 per cent LTV mortgage searches also took a tumble in the period running up to Christmas. 

This, of course, is not necessarily indicative of how 2022 will play out, especially when you have Rightmove suggesting that the period between Boxing Day and New Year’s Day was it’s busiest on record for homebuyers. 

However, it’s also fair to say, that if this represents a surge in housing supply coming to market, then first-time buyers will be as pleased as anyone.  


Supply constraints 

Other data I recently read from a study sponsored by Close Brothers Property Finance and Travis Perkins showed that SME builders are reporting problems with securing the necessary supplies to build new homes and are coming up against delays in securing planning permission.

That appears to mean that existing housing stock will have to do the heavy lifting in terms of actually being available to purchase. 

We talk a lot about the need for greater levels of supply in this market, particularly around the availability of affordable homes for first-time buyers, but any thoughts of the industry benefiting from hundreds of thousands of new-builds every single year from now until the end of days, still seems utterly fanciful. 


Mortgage options 

And that of course continues to present issues for those hoping to get onto the ladder, especially when the attraction of living in a new-build is probably at an all-time high.  

Yes, it is a much more positive picture when it comes to the supply of mortgages to this borrower demographic. We are benefiting from the largest supply of high LTV mortgages for the best part of 20 months, but at the same time it would seem that first-timers are still heavily reliant on the Bank of Mum and Dad. 

Again, more data – this time from Knowledge Bank – suggests advisers are increasingly searching for ‘joint borrower sole proprietor’ mortgages, no doubt in order to support those first-timers who maybe don’t have the income levels required to get on the ladder on their own. 

Add in the house price increases we have seen over the last year – double-digits in some areas of the UK – and there is little wonder, the deposit requirements for first-timers continues to grow. 

Overall, it remains a tricky path for first-timers to tread, especially when it’s quite obvious to all that we remain very much a home-owning democracy where people genuinely want to own their homes as soon as possible.  

In that regard, we can expect the government to continue to support the first-time buyer market through schemes such as its guarantee one, but that is also due to end by the time the clock strikes midnight for 2023.  

 The industry is going to be required to produce its own solutions, such as Deposit Unlock, and the more engagement we have here, the more lenders we have active in this space, the better the opportunities will be for first-timers and their mortgage advisers. 

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