The specialist lender said shared ownership mortgages have helped to bridge the significant affordability gap that exists for those looking to get on the property ladder.
According to the lender’s analysis, had pre-crash financial trends continued, 3.3 million more households would have been expected to buy a home.
Its white paper, entitled Shared Ownership – A Vital Bridge to the Housing Market and authored by economist Rob Thomas, reveals that in 2023-24, the average shared ownership buyer purchased a 40% stake in a home worth £313,100, putting down a deposit of £22,800 and borrowing £99,200.
In contrast, first-time buyers across England raised more than three times that much on average, at £68,600.
The typical shared ownership buyer takes a 40% stake in their home, borrowing 83% of the funds to do so. Their average mortgage of £99,200 is less than half that of a typical first-time buyer, who borrowed £223,000 in 2024, reflecting their lower average incomes.
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However, the average household income of Pepper Money’s shared ownership borrowers exceeds the estimate for the market.
In 2023-24, Pepper Money recorded the average household income at £55,000 – significantly above the estimated £37,000 market-wide figure.
The lender said borrowers were typically older, more likely to buy as couples, and in a strong position to meet their financial commitments even in a high-inflation environment, adding that they aren’t “risky” – they’re just outside the high street mould.
Rob Barnard (pictured), intermediary relationship director at Pepper Money, said: “For many people today, the dream of owning a home feels increasingly out of reach.
“So much so that our paper estimates that 3.3 million households have missed out on entering the housing market since the financial crash. House prices have soared, wages haven’t kept pace, and the cost of renting makes saving for a deposit harder than ever.
“That’s where shared ownership comes in, and we believe this should be an option for more people.”
Gap in the market
Pepper Money’s white paper estimates that more than 25 lenders now offer shared ownership mortgages, but most focus on mainstream products, leaving a gap for buyers with more complex financial backgrounds.
Barnard added: “The pressures facing households today are forcing a growing number of people into more complex financial situations – not because they are irresponsible, but because life has become less linear. And shared ownership, by its very nature, serves those who are navigating life’s complications with resilience and ambition.”
The Financial Conduct Authority (FCA) is seeking views on whether the shared ownership sector has the appropriate levels of competition needed in its discussion paper.
The regulator said it wanted to ensure its rules were not acting as a barrier to entry or adding disproportionate costs to processing the mortgages.
Views must be submitted by 19 September.
