Navigating the FTB market: Trends, challenges, and opportunities – Krampah-Williams

Looking at data from UK Finance, the Bank of England and recent press coverage, this article delves into the key trends shaping the FTB market. 

Resilience amid market challenges 

Bank of England figures for March were published, and as expected, the end of stamp duty relief resulted in a large spike in the month’s lending figures. March was the largest month since June 2021 for gross lending (+£34bn) and net growth (+£12bn). The application market remains above £8bn on a weekly basis, indicating continued buoyancy. 

Q1 market gross lending was 13% higher than Q4 2024 and 51% higher than Q1 2024. 

According to UK Finance, first-time buyers made up approximately 34% of mortgages completed in Q1 2025, marking a 3% increase annually and a 6% increase from 2023. This figure reflects the market’s adaptability despite macroeconomic pressures, including cost-of-living concerns and interest rate volatility. 

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Impact of FCA guidance on stress rates 

A notable development in Q1 has been the Financial Conduct Authority’s (FCA’s) revision of stress testing guidelines. The updated guidance has allowed lenders to reduce affordability stress tests, aligning them more closely with current economic conditions. This change has provided a slight catalyst for mortgage approvals, as lenders adopt more flexible criteria without compromising financial prudence. Santander was the first major lender to make these changes, with other lenders following suit, with some noting it would allow borrowers to access up to an extra £30,000 in mortgage finance.

There are a number of proposals the FCA is looking at this year, including smart data, to make it easier to remortgage as part of wider discussions on the future of the mortgage market.

As a result, we are likely to see changes to the current landscape.

Swap rates – a mixed bag for borrowers 

Swap rates, which heavily influence fixed mortgage pricing, exhibited volatility throughout Q1. The two- and five-year swap rate fluctuated, driven by inflation forecasts and monetary policy signals from the Bank of England. For FTBs, this volatility can translate into fluctuating fixed rate mortgage pricing. 

Affordability and deposit challenges 

Despite policy shifts, affordability remains a significant hurdle. Average property prices stood at £297,781 in April, according to the Halifax House Price Index, which means that to make up a 10% deposit, the average FTB will need to save close to £30,000. And that’s before we include other costs such as stamp duty, solicitors’ fees and furnishings.

This has exacerbated the reliance on family support, with ‘Bank of Family’ often being a resource FTBs are having to use to make up their deposits.

Lender changes to aid first-time buyers

We have seen several lenders step into this space to offer solutions for FTBs. Santander currently lends up to 95% loan to value (LTV) on new-build houses and flats, while other lenders have solutions that include 100% LTV mortgages, £5k Deposit Mortgages, and longer fixed rates to boost affordability.

It is no secret that first-time buyers are pivotal to the mortgage market, and so lenders will continue to find solutions to help them. 

The role of the broker 

UK Finance has suggested the size of the mortgage market in 2025 will be £260bn, which is an 11% increase on 2024.

Most FTBs seek advice through the broker channel, and in recent years, we have seen that 85-90% of mortgage business has been intermediated. This is a great opportunity for brokers to help guide customers through the current landscape. With so much uncertainty, the knowledge of brokers will be more important than ever for customers looking to purchase their next home.

Keeping on top of the market 

The first-time buyer market in Q1 2025 reflects a dynamic interplay between regulatory changes, economic forces, and consumer behaviour.

As the year progresses, monitoring swap rate trends, the real impact of FCA guidance adjustments, and regional market shifts will be critical for stakeholders navigating this pivotal segment of the housing market.