Research from Mortgage Advice Bureau (MAB) into 1,000 renters planning to buy their first home found that 50% did not know they could access a larger loan now than 12 months ago.
It found that many were still making decisions based on previous lending decisions, with 27% saying the biggest barrier to buying was saving for a deposit.
Further, 73% were unaware that 5% mortgages were available.
MAB’s research showed that aspiring homeowners saved for around six years on average before deciding to purchase, but 47% would buy immediately if mortgage repayments were similar to their rent.
The firm said this indicated that monthly affordability was still a main influence on buyer confidence, despite recent lending changes.
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Rachel Geddes, strategic lender relationship director at MAB, said: “For many first-time buyers, the biggest challenge isn’t just saving for a deposit – it’s knowing whether homeownership is actually within reach. What this research shows is that many aspiring buyers may still be making decisions based on outdated assumptions around their borrowing potential, as lenders continue to introduce greater flexibility into the market.
“While affordability pressures certainly remain, speaking to a mortgage adviser earlier in the process can help buyers better understand the options available to them, rather than ruling themselves out too soon.”
Amanda Bryden, head of Halifax Intermediaries and Scottish Widows Bank, said that with more low-deposit options, new schemes and greater lending flexibility, “first-time buyers have more opportunities to get onto the housing ladder than they did even 18 months ago”.
Rachael Hunnisett, director of mortgage distribution at April Mortgages, added: “Aspiring homeowners are spending years saving, making sacrifices, doing everything right, and yet many are still misinformed about how close homeownership could be. The mortgage landscape has shifted significantly in the last 12 months alone.
“Affordability criteria has broadened, lender flexibility has improved, and higher-LTV options, up to 100%, exist that many first-time buyers simply don’t know about. That knowledge gap is the difference between a distant dream and having the keys to your first home in your hands, as this research by MAB highlights.
“The biggest risk right now is buyers ruling themselves out before they’ve even explored their options, based on outdated assumptions.”
Homeownership is closer than buyers realise
Separate research from Iress supported these findings, with its Financial Readiness Index suggesting homeownership was more in reach than many buyers believed.
The index found that prospective buyers expected to purchase their first home aged 38.7 years, despite the actual average first-time buyer age being as low as 33. Iress said this could be realised by engaging with financial advice and planning sooner.
The firm said such support could streamline the process of buying a home and allow buyers to secure a suitable mortgage.
The index also found that 29% of first-time buyers expected to buy their first home after the age of 40.
Just 16% of respondents said they were actively saving to buy a home. Iress said this showed how many people expected to become homeowners later in life and were delaying preparation for homeownership, such as saving for a deposit, budgeting and engaging with a financial adviser.
Jennifer Raffery, managing director for UK sourcing at Iress, said: “Homeownership is often seen as something that happens later in life, but our research suggests many people could be closer to getting on the property ladder than they realise.
“At the same time, we recognise the significant pressures first-time buyers are facing, from rising house prices to reduced product choice and increasingly complex affordability requirements.
She said this created an important opportunity for advisers to engage with clients earlier in the journey.
Raffery said: “With access to the widest range of products and when supported by technology that helps them assess affordability, compare options, identify suitable outcomes more efficiently and even submit mortgage applications faster, brokers are in a strong position to help buyers understand what may be achievable in today’s market and secure the best outcomes on their behalf.”
