Gen H streamlines affordability on income booster deals

Gen H streamlines affordability on income booster deals

Income booster is Gen H’s product that allows a family member to go onto the mortgage, so their income and retirement income can increase the amount of borrowing available.

The lender explained that before the broker had to key in specific financial contributions from boosters which would then inform the maximum loan size clients could secure.

However, the firm’s affordability calculator will now show the maximum loan size for the entire buying group and show what the lender estimates the prospective borrower can afford on their own.

The lender said that the information will “empower brokers to have important conversations around affordability with their clients, helping them to maximise their borrowing without stretching their monthly budgets”.

Gen H continued that after going through affordability, the calculator would present all application products, helping brokers find suitable deals for customers even faster.

 

Age limit ‘ejector seat’ calculation

The calculator will automatically include its proprietary “ejector seat” calculation, which would allow boosters to come off the mortgage before they reach the lender’s maximum age.

This could make the longer mortgage terms available that many buyers need to afford a mortgage, the lender said.

Pete Dockar (pictured), Gen H’s chief commercial officer, said: “To drive real change in the housing and mortgage markets, we need to support both our broker partners and their clients.

“By simplifying our max loan size calculation and providing all suitable products within the calculator itself, we optimise borrowing for even more aspiring homeowners and empower our broker partners to give the best possible advice. The more transparency and information we can provide, the better we’re able to serve our customers.”

 

Artificial Intelligence-powered processing

Gen H recently launched an AI-powered packaging tool, built on Google Cloud, that will automatically analyse and categorise documents needed for mortgage applications.

The company has also been growing its team, recently hiring Karen Appleton as its head of lending, and appointing Dane Clarke and David Jackson as business development managers.

Ignoring first-time buyer obstacles will only deepen despondency – Krampah-Williams

Ignoring first-time buyer obstacles will only deepen despondency – Krampah-Williams

Looking back at some historical data we can see first-time buyers are now borrowing over a longer term, using a higher percentage of their take home pay towards their mortgage payments, affordability has been getting more difficult, and the average age of the first-time buyer has risen.  

Let’s take a look at this in more detail.

Below is an historic view of how much of a first-time buyer’s take home pay is used towards their mortgage. In 1983, the UK average percentage of first-time buyer income used towards their mortgage was 26.6 per cent and 36.6 per cent in London. Fast forward to 2003, and this decreased to 24.5 per cent in the UK but increased for London to 39.8 per cent.

Moving forward to 2023 this had significantly increased to 37.6 per cent for the UK and London had moved to 62.9 per cent. 

 

 

The chart below shows the average age of a first-time buyer also rising, and this now sits at about 33 for the UK.  

 

The average term for a first-time buyer mortgage now sits above 30 years. This has been steadily increasing and when compared to 2005, this was sitting at closer to 25 years. Quite often we see buyers have children before they buy a home. Not only does this make saving for a deposit harder while juggling the cost of childcare, but it also means the type of property they’re looking for needs to be larger or have outdoor space – which isn’t always readily available in the market. 

 

Family support  

Last year, Legal and General published an article saying if the “bank of family” was an actual bank, it would be a top 10 lender with the average gift/loan being over £25,000. The “bank of family” isn’t the only place that has been supporting new homeowners, and not every first-time buyer is in a position to be able to get support from family, but there has been support for lenders and from government they can turn to.  

  

Lenders innovating to help first-time buyers

There has been innovation from lenders to support the first-time buyer market. We have seen lenders offering longer mortgage terms to help affordability. We have also seen 95 per cent deposit mortgages and even 100 per cent mortgages make an appearance in recent years. Additionally, there have also been discussions for longer-term fixed rate deals.  

We have seen “Dutch style” mortgages making an entrance as well as a lender offering up to a 40-year fix.  

  

Help from the government

The government has assisted first-time buyers with stamp duty incentives, the Help to Buy and First Homes schemes, shared ownership and Help to Buy/Lifetime ISAs. There is hope that there will be more incentives for them in the upcoming Spring Budget.  

This has included rumours of 99 per cent mortgages and stamp duty changes, while others want the return of Help to Buy in some form. However, we will not know for sure until Chancellor Jeremy Hunt makes his announcement on 6 March.   

  

Still, there’s hope for first-time buyers 

Although it has been getting increasingly difficult, there is still hope for first-time buyers. Speaking to some of our economists, we expect this segment to remain strong and slightly increase as a percentage of the mortgage market in years to come. 

First-time buyer projections (Santander UK) 2023 2024 2025 2026 2027 2028
Total gross advances (£bn) 220 205 248 263 290 300
First-time buyers (£bn) 53 50 62 67 74 77
First-time buyer share 24.1 per cent 24.4 per cent 24.9 per cent 25.4 per cent 25.5 per cent 25.6 per cent

 

At this time, it is important to ensure we help first-time buyers navigate the mortgage journey and help increase their financial literacy. There will always be a market for new homeowners and the needs and requirements of these buyers will continue to evolve. It is important that as mortgage professionals we continue to innovate and find ways to support and guide our first-time buyers to ensure that they not only are able to get into their home, but also stay in their home. 

We are reaching the peak of how long a mortgage term can run for without beginning to look at multigenerational loans. Considering the price of property and income levels, if we continue the same trajectory things will not get better. There is a lack of new properties being built and the demand for housing remains very high.  

The rental market may seem like an option for those unable to buy, however the soaring costs of renting is also making the situation for first-time buyers to purchase their first homes increasingly difficult.  

We need to build more homes, find ways to help affordability and help first-time buyers save for deposits.  

We also need to see continued innovation from lenders and government alike, but if we do nothing, the situation will look worse in 2033 and 2043 and you could find yourself reading similar articles in years to come. 

 

Tandem launches affordability calculator

Tandem launches affordability calculator

The new tool from Tandem means brokers will be able to check the maximum loan available in a few steps, leading to better and faster lending processes and decisions.

The launch comes off the back of direct feedback following Tandem’s engagement with intermediaries.

Mark Shelper, national account manager at Tandem, said: “We’re delighted to launch the affordability calculator, which will again help our brokers with better and faster decisions.

“Created following their feedback, the initial results are overwhelmingly positive – I’m delighted we can listen to them and act quickly to ensure Tandem remains a leader in the market and our proposition continues to develop.”

The bank – which in early February signed the Women in Finance charter – said that it was “keen to evolve its proposition and engage directly with brokers, who remain core to the bank, through its key relationship managers”.

“The bank sees this human element as primary in underpinning its technology and experience,” it noted.

Over a quarter of over-55s fear inability to afford their mortgage

Over a quarter of over-55s fear inability to afford their mortgage

According to research from long-term fixed rate specialist Perenna, another 36 per cent of over-55s said they would find it difficult to manage repayments, which the lender said would bring the total who could struggle to almost two-thirds.

More than a third of over-55s – 37 per cent – said they would consider selling their home or downsizing, and this goes up to almost half in London.

Perenna said that lenders usually place end-of-term age limit restrictions on older borrowers trying to secure a new mortgage or remortgage.

Approximately two-thirds believe there is a lack of choice and financial products catering for them, and more than a third find their mortgage restrictive due to the age profile.

Perenna said that this raises concerns of an “increase in financial exclusion”, and nearly a fifth said that respondents said mortgage repayments had limited their ability to travel or engage in leisure activities.

An additional 17 per cent report an impact on their financial stability and capability to support their family, and nine per cent have delayed their mortgage to repay their mortgage.

 

‘A whole demographic is being unfairly excluded’

Perenna recently brought out a retirement interest-only mortgage and interest-only option targeted at borrowers over the age of 50, available up to 60 per cent loan to value (LTV), with pricing beginning from 5.84 per cent.

Arjan Verbeek (pictured), CEO and co-founder of Perenna said, “The current UK mortgage market is ageist. A whole demographic is being unfairly excluded and left behind because of their age. We think that is wrong.

“The lack of options available for people over 55, underpinned by a fear of being trapped in their provider’s SVR, is putting many in financial distress. This shouldn’t be the case. Retirees should have solutions available to live the lives they desire and deserve. Our new long-term fixed rate retirement interest-only mortgage is a step towards financial freedom for older homeowners.”

In an interview with this publication, Colin Bell, Perenna’s founder and chief operating officer, said that its no-maximum-age criteria were attractive to brokers and could cater for customers aged over 55.

 

 

Virgin Money improves affordability; Hodge makes holiday let changes – round-up

Virgin Money improves affordability; Hodge makes holiday let changes – round-up

Virgin Money said that the extra amount would depend on individual customer circumstances.

The lender has made several moves to improve affordability, removing its interest-only cap for loan to income (LTI), which previously stood at 4.49 times income.

The company has also changed affordability by extending the maximum mortgage term for all residential mortgages to 40 years, up from 35 years before. This will allow more customers to borrow up to a maximum five-and-a-half times LTI cap.

 

Hodge cuts holiday let rates and improves criteria

Hodge said it has lowered the majority of its holiday let rates, with pricing beginning from 6.08 per cent.

Its two-year fixed rate at 75 per cent LTV with a £995 fee is 6.28 per cent. With a £1,495 fee, it is 6.08 per cent, and with a £1,995 fee, the pricing begins at 5.98 per cent.

The lender’s five-year fixed rate with no fee is 6.2 per cent, £995-fee version is 6.05 per cent, £1,495-fee version is 5.85 per cent, and with a £1,995 fee it is 5.75 per cent.

The lender’s five-year stress rate has moved to pay rate, and its pound-for-pound stress rate is the maximum of five-and-a-half per cent or the pay rate plus one per cent.

Debt consolidation is now available up to 75 per cent loan to value (LTV) and the maximum loan size of £1.5m available up to 75 per cent LTV.

Properties above and adjacent to commercial are considered, with annexes and two-kitchen properties now under consideration at application.

Molo lowers BTL stress rates

Molo lowers BTL stress rates

The stress rates for two-year fixed rates for UK residents will fall from 9.94 per cent to 7.94 per cent, which the lender said will boost borrower affordability by 20 per cent.

For tracker products for UK residents, the stress rates will go from 9.94 per cent to 8.39 per cent to 9.49 per cent. Molo said that this will increase borrower affordability by up to 16 per cent.

Non-UK resident two-year fixed rate stress rates have reduced from 10.99 per cent to 8.99 per cent, improving borrower affordability by 18 per cent.

Non-UK resident tracker product stress rates have decreased from 10.99 per cent to 10.49 per cent to 10.99 per cent. This will increase borrower affordability by up to five per cent.

Molo reiterated that its “stress test logic” for two-year fixed rates was the higher of pay rate, follow-on rate or 5.5 per cent.

For five-year fixed rates, it is the pay rate, and for tracker rates, it is the higher of pay rate plus two per cent, follow-on rate or 5.5 per cent.

For variable rates, it is the higher of pay rate plus two per cent or 5.5 per cent.

Mark Michaelides, Molo’s VP of strategy, said: “Affordability has been one of the biggest challenges facing landlords over the past 12 months, so we’re delighted to announce a recalibration of our stress test to reflect current market conditions and help support the private rental market.

“We will continue to lend responsibly, providing confidence to brokers and borrowers alike.”

The change in stress rates come off the back of recent rate cuts by Molo, where it made reductions of up to 0.71 per cent across its fixed rates.

The lender also made the change last year to include personal income in BTL affordability assessments and released non-resident BTL mortgages last year.

Francesca Carlesi, founder and chief executive of Molo, left the firm last year, with Andrew Chepul, CEO of investor ColCap Financial serving as interim executive chairperson.

LLLE 2024: ‘Affordability now sits at the heart of that adviser-customer conversation’

LLLE 2024: ‘Affordability now sits at the heart of that adviser-customer conversation’

Speaking at the Later Life Lending Event (LLLE), Paul Glynn (pictured), Air CEO, said that the “shifting pattern in terms of reasons for looking at equity release and reasons for releasing” is creating quite a “complicated picture in terms of the conversation happening between adviser and customer”.

“Loan to values (LTVs) are an issue; we’ve seen some easing at the start of this year, but it’s definitely still a pressure. We’ve seen higher interest rates impacting people’s ability to service interest, adding to that sort of the cost-of-living pressures… leading to a more complex and evolving conversation.”

He said there is “much more consideration now around how much the customer can pay” and “affordability now sits at the heart of that adviser-customer conversation”.

“It opens up a raft of different potential new product options, it certainly makes it very clear the wider product options that will be available to the customer but also the benefits in the high interest rate environment. It has been able to support some of those interest payments in a lifetime mortgage scenario where the interest is rather low,” he said.

 

Changing customer situations putting more focus on new product design

Glynn continued that the “evolving customer circumstances” had brought “more pressure and focus on bringing new product design to market to solve that problem”.

He said that, at the end of last year and going into this year, there were “more products being released, more product options being released from the traditional space and now more options in terms of LTV”, adding that LTVs available for customers were typically four per cent higher now than they were last year.

“The gap in terms of being able to find customers who can meet those higher interest payments in terms of mainstream mortgages is higher, and the gap in terms of customers who are able to find the LTVs they want in the lifetime mortgage space and then have an appetite for the roll-up interest in that space is wider today.

It is a big chasm with customers where we need product design to support and develop propositions for them.”

He said that the more “comprehensive in-depth challenging conversation with a customer about how much they can afford to pay” would hopefully lead customers down two tracks.

If customers can pay interest-only level or more, then they can follow that route, or if they can pay slightly less, then they can secure a lifetime mortgage with mandatory payments.

“Essentially there, you’ve got agreed contractual payments of interest at a level that is interest-only levels or below, and in exchange for those payments being made, you’ll see some element of offset against interest roll-up, but you’ll probably then see an economic benefit pass through to the customer in one or two forms.

“Either those products will have a lower interest rate or they’ll have a higher LTV, but by asking those comprehensive questions around how much the customer can pay then the full suite of product options will be available for discussion within the advice process,” he explained.

“I think there’s lots of reasons to be cautiously optimistic that if we have those great conversations, that customers who we knew sourced in 2022 and 2023 but couldn’t find a product are now going to, at least if they can make payments, have some more options open to them as we go into 2024 is really encouraging,” he said.

 

Later life lending seeing shift to needs-based releases

Glynn said that in the last year there had been a “definite shift” to more “needs-based releases” post-fact find, which he attributed to the pressure from the heightened cost of living.

“If you look at the amount of money released for paying off debt, rather than it being the headline 29 per cent in 2023 compared to 28 per cent the year before, when you look at the amount of money that was released to pay both unsecured debt and mortgages – particularly in the interest-only space – 56 per cent of the money released was driven by those two factors,” he noted.

Glynn added that there was a “much more conservative approach to releasing funds for other reasons” in terms of how they’re spending their money and the amount they released, with holidays as an example.

“It was a much more needs-based, much more conservative focus, and the reasons for releasing those funds was more about addressing mobility issues, more about preparing for retirement. It was much more about that needs-focus rather than some of the cosmetic and aspiration reasons,” he noted.

 

The LLLE will return next year on 23 January 2025 at Hilton London Bankside.

TSLE 2024: Buy-to-let affordability needs to ‘adapt and change’

TSLE 2024: Buy-to-let affordability needs to ‘adapt and change’

Speaking at The Specialist and Lending Event (TSLE), Matthew Jackson, director of Mint FS, said there were challenges in the residential and BTL sectors around affordability, with the former subject to a loan to income cap and the latter under pressure from stress tests.

“When you look at professional landlords and how their income is treated and how they’re stress tested, the rules around that – in terms of affordability – need to adapt and change.

“The common issue is that when [borrowers] are with a specialist lender already, they can’t actually remortgage and keep that rate [due to affordability],” he added.

Jackson noted that long-term fixed rates from “niche lenders” like Perenna could help with affordability, but that there was more innovation needed in several areas.

On the residential side, he said lenders could look at how the deduction on payslips, such as pensions, could help with affordability.

 

Affordability innovation will come from ‘product development and entering new parts of the market’

Phil Quinn, national account manager at Bluestone Mortgages, said that once a lender reaches a certain size, only a certain percentage of their book could be four-and-a-half times income or high due to regulation.

“Lenders that are established will always find the challenge on income multiples. With innovation continuing in the market, we do see new lenders enter that space for temporary periods of time, so you’ll be able to find lenders that will lend greater than five or five-and-a-half times income even, so some of the smaller lenders that may not be so well-known will, for a period of time, be able to use higher-income structures,” he added.

Quinn said that he was seeing more innovation on the specialist side in “what can be used in terms of affordability” so the “income multiple doesn’t necessarily become the issue”.

“It’s more around what can we utilise to make up the income so that will generate the maximum borrowing, so you’ll see the likes of utilisation of net profit, limited company, multiple sources of income, treating contractors and CIS workers as employed to generate income on gross figures.

“So, specialist lenders will evolve as we move through 2024, but bear in mind we do have some restraints on income multiples themselves, so a lot of innovation will come from product development and entering new parts of the market to just have additional target audiences,” he explained.

When asked about Office for National Statistics (ONS) data, which is used in lender calculations around affordability, Quinn said that it was at a “crossroads” in terms of “income versus commitments”.

“Frankly, I think lenders nor regulators have the confidence at the moment whereby we know what commitments will look like… because there are so many fluctuations at the moment – gas and electric bills, for example. It’s just a yo-yo at the moment.

“So, how can lenders and/or the regulator have confidence in the stability of commitments to allow perhaps a greater level of borrowing? I think we’re in a bit of a tricky spot with that. So, any innovation that can come beyond that would be most welcome,” he added.

Jackson continued that this highlighted the need for the specialist space, as the automatic decline of an application due to ONS data “causes real problems”.

He continued by saying that if brokers were putting through a decision in principle with a high street lender and it immediately rejected the application on affordability, “there’s very little you can do with that to work around it”, which is where a “manual underwriting process” can be very helpful.

 

BTL product fees can be ‘bitter pill to swallow’

Quinn said that, with high-product-fee, lower-rate products that have swept the BTL market, lenders will say that they were “being creative” and “trying to find a solution to improve ICR calculations”.

“This is probably more targeted at portfolio or professional landlords, given the pricing of the fees, and if you are a portfolio landlord – and let’s say you’ve got 10 properties and it’s a £25,000 fee – you’ll probably swallow that up across your portfolio and you might increase each property’s rent to compensate for it.

“But that doesn’t help the individual landlord or the smaller landlord, so I think lenders at the moment are having to fight for market share, fight for volume in the BTL space, just given where the market is,” he added.

Quinn noted that the BTL sector was a “quite crowded space”, so the innovation is “really… to try and help them win more business”.

He said he empathised with brokers who were showing a demonstration to a client with a seven per cent fee, adding that it could be a “bitter pill to swallow”.

“It’s not going to be right for every customer, I think that’s absolutely essential to your advice, is to know when it’s not right and when it is the right outcome for them. But there is an element of if we can’t get the deal through on this basis, it’s not going to happen regardless, so that’s probably why it’s almost a forced situation in a way, because of where the market is at,” Quinn said.

Jackson said that he had presented a case to a customer with a £50,000 fee and it was all about “understanding” and being “truthful” with the customer.

He explained that the landlord wanted to keep the property as a long-term investment in their portfolio and the only way it was going to work was with a product with a nine per cent fee.

Jackson said that “there was a lot of back and forth” internally as to how to justify the fee and what needed to be said to the client to make them aware of the reasoning, but in reality, it was “the only option”.

“There were obviously advantages to this particular person because of the size of the portfolio and the fact that we can use that fee to offset some tax, but you’re also putting it onto the loan, you’re affecting their portfolio, you’re affecting the stress testing.

“There’s so much stuff to consider around that in terms of how we advise the client, so it is a minefield without a doubt. It’s not right for the majority of people, but there are instances where it is the right thing to do,” he said.

 

Product transfer proc fee alignment may not be possible for specialist lenders

Regarding product transfers, Jackson said that there seemed to be a “disparity” between what lenders are offering on purchases and remortgages versus product transfer, which he said highlighted where lenders expected to get most of their business this year.

Quinn said that Bluestone Mortgages had launched its product transfer proposition in December, and it had received 600 applications since then.

“We’re pricing that based on loan to value (LTV) as opposed to adverse credit like we do on new business, so we’re really going beyond our normal way of reviewing customer profiles because we want to help customers step up to the high street, that’s what we want to do, and product transfers are a stepping stone for that.

“We’re pricing that a little bit differently to new business, but it’s more advantageous for the customer,” he added.

When asked about procuration fees for product transfers, which advisers have called to be better aligned with purchase and remortgage business, Quinn said that, as it was a new offering for Bluestone, it would have to “see how it lands a bit more”.

He said it was currently offering 35 basis point proc fee, but from a lender’s point of view, it was down to their commercials.

“Funding dynamics will differ amongst lenders, but there’ll be a lot of similarities in the specialist world, given the way they are funded, how they’ve been securitised, so commercially, it’s perhaps not viable for most specialist lenders to be able to pay the full proc fee for an existing customer.

“However, of course, we appreciate and value the work that everyone in the room does. My view perhaps won’t be helpful on this occasion because it comes down now to the balance of the commercial versus the value of advice, so I’m trying to see both sides,” Quinn added.

 

There is still time to register for TSLE. Events are taking place this week in Wetherby and Bolton.

Exclusive: Perenna’s affordability calculator hits over £700m since product launch

Exclusive: Perenna’s affordability calculator hits over £700m since product launch

Perenna brought out its affordability calculator in June last year so potential borrowers can find out how much they can borrow, before going on to launch its 40-year fixed rate mortgage product in November, with pricing beginning from 5.75 per cent and borrowers able to borrow up to six times their earnings.

Perenna opened to the wider broker market in January this year, having joined the lender panels of Mortgage Advice Bureau (MAB), Stonebridge and Legal and General Mortgage Club.

Speaking to this publication, Colin Bell (pictured), Perenna’s founder and chief operating officer (COO), said that the advantages of Perenna were flexibility and stability, pointing to the fact that mortgage brokers are in control of the move date as opposed to the lender.

He continued: “If you’re on a two- or five-year deal and you have to remortgage by a certain date, that could be the worst time, as people are finding right now.

“It could be good to move in five years, seven years, even in year four for example, the early repayment charge (ERC) is quite small as well as and financially it may be beneficial to move.

“The move date and the ability to change the mortgage rates rests in the control of the consumer, and the broker.”

“I think we consider this the complete mortgage product because it’s got affordability, stability, and flexibility all in one product. I think that’s why they need to look at us.”

 

Consumer Duty will assist long-term fixed rate popularity

Bell said that changing the mindset of the broker community from short-term products to long-term products would be aided by Consumer Duty.

He explained: “Under Consumer Duty, I think if you don’t show people long-term products alongside all the other products, you’re probably not doing justice to the consumer.

“In the past, this could be because the long-term product didn’t really exist or because it had bad ERCs. You didn’t have to show it, or you couldn’t show it. It didn’t exist, but now it does exist.”

Bell said that brokers should be showing long-term products as an option to “every customer” and then “make the choice based on their risk profile”.

“Consumer Duty is our friend and always has been our friend, and we designed our product around consumers, which is what Consumer Duty is all about anyway. It’s really important because if you didn’t demonstrate to the customer that there is a long-term stable product, it is not a good place to be sitting in three years’ time or two years,” he noted.

Bell said that there were a “lot of buyers” that were benefitting from Perenna’s approach, but first-time buyers were especially attracted given the increased challenges to get on to the property ladder.

“They [first-time buyers] find it very difficult to get on the property ladder initially and as we fix for the whole term so we don’t have to stress for interest rates, so in theory, a lot of people can get more money and buy the house early or the flat earlier or buy the one they really want what to buy without compromising,” he added.

He added that Perenna was also looking at other networks and larger firms, as well as “more specialist firms” who focus on first-time buyers, for instance.

 

Perenna’s no maximum age criteria proving attractive to brokers

Bell added that the Perenna’s no maximum age criteria were proving popular with brokers, as there are a lot of borrowers aged 50 or more who are remortgaging, but their term is constrained by their age by the big lenders.

“We had an inquiry for someone who was 72 and they were offered 30-year term but on a five-year fixed rate, but at 77 the market is even smaller, what are they going to do? Does that person want to live in the property for the rest of their lives potentially? What do they do when they hit 85?” he noted.

Bell said that, as first-time buyers were getting older – typically being in their 30s now – a 35-year term is taking them into 70.

“It’s educating the brokers in the community that we’re flexible. We’ve got the no max age, we can lend a little bit more to a lot of people and we have stability.”

 

Perenna recruitment underway to ‘build’ ability to ‘deliver at scale’

Perenna is recruiting business development managers (BDMs) to sit with national account managers as well for operations and underwriting.

“We’re recruiting now so that we build out our ability to deliver at scale. We’ve got good people and experts in all of the functional lines, and we have had that for a bit of time and now we need to build out those teams. We’re kind of recruiting across the board at the moment, we’re in a really lucky position that we get approached a lot.

“We’re not having problems recruiting people. I think a lot of people really like what we’re doing, they see the difference and they want to kind of come and join the club,” he added.

First-time buyers aged 45 to 50 fastest growing bracket over five years

First-time buyers aged 45 to 50 fastest growing bracket over five years

According to analysis from Tembo, which used product sales data from the Financial Conduct Authority, the five-year annual average growth rates for 40 to 45-year-old first-time buyers is eight per cent.

The growth rate is 6.9 per cent for those aged 46 to 50 and in the 51 to 55 age group the rate stands at 6.6 per cent. For those aged 50 and over the five-year annual average growth rate is seven per cent.

This compared to a negative 1.7 per cent five-year annual average growth rate for 18 to 25-year-olds and minus 0.2 per cent for those aged 26 to 30-years-old.

First-time buyers aged 31 to 35 grew by around 2.3 per cent over the past five years and the 35 to 40-year-old bracket the five-year annual growth rate is 4.8 per cent.

The data shows that the overall number of first-time buyers has grown by one per cent on average each year since 2018, with 360,000 first-time buyers in 2022.

Within that figure, 12,000 first-time buyers were aged 50 in 2022 and the number of first-time homeowners over the age of 50 has grown by nearly a third over the past five years.

 

London fastest growing region for older borrowers

From a regional perspective, London has the lowest proportion of first-time buyers over 50 at 2.4 per cent, followed by Northern Ireland at 2.5 per cent and Yorkshire and the Humber at 2.7 per cent.

The South West had the highest proportion at 3.5 per cent, then the East Midlands and West Midlands at 3.3 per cent apiece.

However, London is the fastest growing region for older first-time buyers with the five-year growth rate for this age bracket coming to 64 per cent. This was followed by Northern Ireland at 58 per cent and the East of England at 47 per cent.

 

Nearly quarter of FTBs by 2030 will be over 40

Tembo has projected that, assuming overall first-time buyer numbers stay flat at around 360,000, by 2030 there will be 89,000 first-time buyers aged over 40 by 2030, equal to around quarter of first-time buyers.

For those aged over 50, that number will rise from 12,000 in 2022 to 19,000 by 2030, equivalent to around five per cent of total first-time buyers.

Tembo said that it was taking longer to save for a deposit, housing affordability was more constrained, support from family and friends and government schemes was more vital and there were more mortgages running into retirement.

Richard Dana, founder and CEO at Tembo said: “A perfect storm of factors impacting first-time buyer affordability means we’re now seeing a sharp rise in the number of people waiting until they’re aged 50 or over before they buy their first home.

“This is presenting a challenge to both the financial services industry and would-be home buyers, with many traditional high-street lenders not offering extended mortgage loan terms beyond the age of 75.”