The shift happening in the first-time buyer market – Lindsay

Buyers are coming to the market with larger deposits, sometimes out of preference, but increasingly out of necessity as affordability gets tighter.

Higher deposits are key

This behavioural shift is coming from two key considerations. Firstly, with average house prices now hovering over £300,000, many buyers are unable to access the levels of lending they once could, even when buying jointly with a partner. Larger deposits help to bridge the gap.

With the need for larger deposits, we are seeing a growing reliance on the ‘Bank of Mum and Dad’ and family gifting. Family support is increasingly becoming the difference between accessing the market at all and being locked out of it.

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Lower LTVs and a more cautious mindset

Perhaps more notable is that affordability isn’t always the key driver in isolation; some buyers are choosing lower loan-to-value (LTV) options to reduce their level of borrowing. The higher rate environment has shifted perceptions of debt, with many buyers choosing not to stretch themselves too far in uncertain times. A lower LTV significantly improves pricing, reduces monthly repayments, and provides greater control and security.

This marks a clear departure from the desire for a maximum borrowing mindset that we saw in the low-rate era. Today’s first-time buyers are more measured, more risk-aware, and much more deliberate in their decisions.

The impact on the wider property market

The caution from first-time buyers is also influencing property choices. With larger deposits, along with the need to cover stamp duty, legal and moving costs, buyers are placing greater emphasis on buying a property that offers long-term suitability. First-time buyers are choosing to steer away from the traditional starter home and instead choosing properties that will meet their needs for longer.

This has implications for the lower end of the market, which was traditionally bought by first-time buyers, and can create less liquidity at the bottom of a chain.

The challenge and opportunity for lenders and advisers

For lenders, lower-LTV lending offers risk advantages, but it also brings margin pressure and raises questions around accessibility for those without larger deposits. Over the coming months, we are likely to see more innovation from lenders, who will need to be competitive to get those clients over the line. We want to see mortgages made more accessible for those who don’t necessarily have family support but still want to realise their homeownership dreams.

For advisers, deposit strategy is now central to the advice process. Decisions around how much to commit and how to balance liquidity against borrowing costs are now more complex and our role as advisers is to help clients navigate these trade-offs.

The move towards larger deposits reflects a deeper change in the market. Affordability is tighter, risk is more front of mind, and buyers are taking a more considered approach to borrowing. Advisers have a real opportunity here to demonstrate true value, and we must get to know our clients on a deeper level to ensure they are making the right decision for them now and their future plans.