The affordability myth: Unlocking the next generation of homebuyers – Thompson

This shift makes homeownership a far more financially viable option than many people currently realise.

While headlines continue to focus on high interest rates, inflation, and the overall cost of living, the fact of the matter is mortgage repayments in many areas now rival, or even undercut, monthly rent.

The challenge lies in the sizable perception gap, which means many prospective buyers are unaware they’re already able to purchase their first property. This is where the role of a broker really comes into its own, educating renters on the range of options available and helping them navigate this complex landscape.

Missed wealth opportunity

MAB’s latest research revealed that renters could miss out on up to £340,000 over a 30-year period by not buying a home. This substantial financial advantage is made up of two key parts: £206,031 in direct cost savings and an additional £132,139 in potential investment returns (if those savings were consistently reinvested).

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The financial benefits of homeownership become even clearer when you look at individual cities. London renters, for instance, could miss out on £540,687 over 30 years – that’s a loss of nearly £50 every single day. The numbers are equally compelling in other major cities, with a missed opportunity of £428,223 for renters in Manchester and £38,588 in Bradford.

Encouragingly, the Financial Conduct Authority (FCA) is currently (and rightly, in my view) considering proposals that could allow lenders to factor a renter’s consistent payment history into affordability assessments. While some lenders have already begun adopting this approach, a wider industry change would be a game-changer for the new generation of buyers – many of whom are currently unable to save for a deposit because of high rental costs.

Tapping into the renter mindset

This disconnect is further highlighted by our latest consumer survey, which found that more than half of renters (56%) would consider buying a home if the monthly mortgage payments were on par with their current rent.

Notably, the long-term view across MAB’s renter survey overwhelmingly favours homeownership, with nearly two-thirds of people (64%) believing it offers greater financial security. Similarly, a strong majority (73%) see renting as “money down the drain”.

The perception gap is especially evident among different generations. Younger renters are more likely to view renting as a safer short-term choice due to lower upfront costs, greater flexibility, and no maintenance responsibilities.

Despite these concerns, only a fraction of 18-24 year-olds (7%) believe they will never be able to buy a home – in stark contrast to the 56% of those over 55. This optimistic outlook from the younger generations may be down to the awareness and insight they have access to through social media on innovative financial products and schemes designed to help first-time buyers. Either way, the role of a broker is paramount to ensure they’re aware of all possible routes to homeownership and have everything they need to make an informed decision.

Turning dreams into reality

In today’s market, the idea that you need a huge deposit or a flawless financial history to buy a property is a myth. The reality is that innovation, coupled with the relaxation of stress testing, has made homeownership more accessible than it has been for a very long time, and we’re the individuals who have it in our power to make it happen.

From options that require a 5% or 10% deposit to the introduction of innovative solutions like joint borrower sole proprietor (JBSP) mortgages, shared ownership, and even 100% mortgages, there’s a path for a wide range of homebuyers.

This is where brokers are uniquely positioned to bridge this perception gap by conducting personalised affordability checks, educating customers on the options available, and helping prospective buyers understand that their dream of owning a home is well within reach.

Inspiring future homebuyers

It’s never been a better time to buy, and a significant opportunity is emerging for renters across the UK. The old narrative that renting is the only option no longer holds true, with a narrowing affordability gap and innovative products making homeownership a realistic goal for a wider range of people.

For brokers, this represents a unique moment to step forward, lead the conversation, and use their expertise to provide tailored guidance to help would-be buyers understand their true financial position. By helping to bridge this critical perception gap, brokers can play an essential part in empowering the next generation of first-time buyers.