Certainly, I saw a number of cases highlighted in the media where the impact was severe, and with a combination of pulled products and heightened rates, the ability of some first-time buyers to get on the ladder was severely curtailed.
It’s to be hoped that the recent moves in a positive direction for both pricing, products and criteria is starting to restore the balance a little in the market. However, it’s obvious that we still face a significant number of challenges in supporting greater numbers of first-time buyers into the housing market.
Recent research from Aviva outlines this in spades suggesting that issues, in particular the increased cost of living but also the recent rise in mortgage costs and the ongoing difficulty in securing the necessary deposit level, are forcing a significant number of under-45s to shelve any plans they might have had to purchase.
Indeed, it suggests that over a million people in this age demographic might have felt the need to do just that in recent weeks.
Ageing first-time buyers
As we know, the average age of a first-time buyer continues to rise.
The Covid pandemic appeared to hasten this, pushing the average age up to 34 according to Land Registry, as individuals are taking longer to meet all the requirements of getting on the ladder. We might expect that figure to continue to increase, although not quite as old as the gentleman I saw recently who has just bought his first home – a bungalow – at the sprightly age of 86.
No doubt this story would have set certain tongues wagging about mid-80s soon being the average age for first-timers if we’re not careful. There’s a serious point here and its evidence lies in this research and indeed in other areas of our market, particularly in terms of access to specific schemes for first-timers, getting over deposit and affordability stumbling blocks, and those with would-be buyers with more layered complexity.
These buyers may have multiple layers including the source of some, or all, of the deposit, plus of course any potential issues with their credit, and indeed overall affordability in an environment (at least for the short-term) which could see further rate rises.
The individual details
This is why it’s so important that lenders don’t treat first-timers as one homogenous group, but instead, look at the niches that exist within and tailor a product proposition towards them.
For example, that could be looking at professionals and their opportunity for sharper income growth as a result of their qualifications and career progression opportunities, or it could be looking at those with multiple sources of income – much more normal in today’s job market – or indeed individuals who might have a family tie and want to apply for a mortgage together.
Adding to this are other elements that need to be factored in, including the source of some or all of the deposit, plus any potential issues with credit, and overall affordability in an environment (at least for the short-term) which could see further rate rises.
That said, if prices (as expected) do come off their recent highs, and again as anticipated, inflation begins to fall mid-2023 which precipitates further falls in mortgage rates, we might have a better environment for first-time buyer activity next year than we have had in the past few months.
Add in the stamp duty holiday which could act as a further catalyst for activity, and the provision of strong advice and a range of mortgage options for all types of first-time buyers does remain vitally important. Particularly when we know both the government’s mortgage guarantee scheme and Help to Buy have effectively run their course.
Lender support
From our perspective, we’ll continue to support first-time buyers into and beyond 2023. It’s up to us as lenders and you as advisers to present as many mortgage solutions as possible to as many wannabe purchasers as possible. Some may not even know they can secure the finance they need, others might think the market has shifted too far beyond their reach when the opposite is true.
The message is that we do have the appetite to lend in this space, and those who want to embark on the journey, should be starting by utilising the services of a quality adviser who understands all the options available.
