According to insight from the Building Societies Association (BSA), 47% of people who want to buy a home have never spoken to a lender or mortgage broker to explore the possibilities. Of those who have consulted professionals, 46% have not engaged with lenders or advisers in the last year.
However, after they were shown what low- or no-deposit options were on the market, 67% of respondents realised that they would have been able to buy a home sooner than they thought.
Affordability and deposits are the main barriers
Some 59% of first-time buyers have less than £10,000 in savings and believe that it will take around six-and-a-half years before they are able to purchase their first home.
Around a third – 32% – feel they will never achieve homeownership.
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Respondents cited affordability and raising a deposit as the main hurdles, making up 64% and 53% of responses respectively.
The BSA said building societies had been the main supporters of first-time buyers by offering flexible, innovative mortgage options that suit the circumstances of aspiring buyers, such as high house prices and non-traditional careers.
This includes mortgages for people with low or no deposits, shared ownership and extended or flexible repayment terms.
The mortgage options offered by mutuals have resulted in the sector providing 35% of all first-time buyer lending. Some 46% of this was to borrowers under the age of 30, and 23% was to people who had a deposit of less than 5%. A tenth of first-time buyer lending was to people aged over 45.
The value of homeownership
The BSA asked respondents why achieving homeownership was important, and 53% said it would give them more stability, while 43% wanted their own space. A further 47% wanted to own a home so they could stop paying rent.
The research suggested more understanding was needed, as 48% of respondents wanted more information about the products available and 44% wanted clarity on how much of a deposit they would need. Some 29% were unsure about who to speak to about their options or how to improve their credit score.
For 53% of respondents, a mortgage adviser was the most trusted source of information, followed by 43% who said financial providers.
Paul Broadhead, head of mortgages and housing policy at the BSA, said: “Too many aspiring first-time buyers assume homeownership is off the table without ever checking what is actually available to them. This research shows that’s a mistake! When people explore the kinds of mortgages building societies offer, many realise they could buy sooner than they thought.
“Building societies have been helping people into their first homes for more than 250 years and that hasn’t changed. We’re still innovating, still flexible and still focused on real people and the challenges they face.”
He added: “A simple conversation with a building society or mortgage broker could open doors that you may not realise were there.”
Lucy Rigby KC MP, Economic Secretary to the Treasury, said: “Too many people are giving up on owning a home before they’ve even spoken to a lender – believing that getting the keys to their own place is out of reach. But now that there are more attractive and flexible products on the market, it’s right that people are encouraged to have another look to see if there might be an option [that] works for them.”
