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Are First-time buyers numbers continuing to slump ?

Journalist: Newsteam, Newsteam

ended 27. September 2023

First-time buyer numbers slump on higher mortgage costs

The number of first-time buyers fell by 22% over the first eight months of the year according to news on FTSE 100

Bank of England - First time buyer numbers slump on higher mortgage costs

 

Higher mortgage rates have led to a slump in the number of first-time buyers, according to lender Halifax, as falling property prices and higher wages fail to appeal.

There was a 22% drop in the number of first-time buyers to 186,015 between January and August, the bank said, as high interest rates on mortgages weighed in.

This was in spite of houses being at their most affordable for first-time buyers since 2020, with the income ratio for the group falling to 5.1 from 5.8 last year.

“Getting the keys to your first home is a significant milestone in anyone’s life,” Halifax mortgage director Kim Kinnaird commented.

“Growth in house prices over the past decade means raising a suitable deposit remains a significant hurdle.

“Coupled with the sharp rise in interest rates more recently [...] there is lots to consider for any first-time buyer.”

First-time buyers did indeed make up more than half of those taking out loans over the first eight months of the year, with a wider slowdown in the market seeing the figure largely unchanged from 2022.

The average age of those purchasing a property for the first time has now hit 32 meanwhile, having climbed by two years over the past decade.

“The expected further fall in house prices this year - alongside stronger income growth - may somewhat offset higher interest rates, which will be welcome news to many,” Kinnaird added.

However, interest is tipped to stay high into the coming year after the Bank of England held the base rate earlier this month in its bid to stem inflation.

Want to hear from brokers on the following:

  • Are you experiencing any downturns in First-time buyer applications?
  • Are deposits still an issue for First-time buyers ?
  • What incentives could lenders or the government offer to grow the First-time buyer market ?

9 responses from the Newspage community

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Darryl DhofferVerified
Founder at The Mortgage Geezer
Enquiries for First-time buyers have been largely consistent this year. Unfortunately, the high-interest market that we are experiencing coupled with house prices that have largely remained buoyant, has created an affordability issue for many. Also, a lack of suitable properties coming to market is still an area of concern. I think as we close this year and enter into 2024, the Government think tank, needs to address the possibility of a return of the Help To Buy Mortgage Guarantee Scheme, and possibly address stamp duty thresholds again. Possibly even scrapping stamp duty altogether for downsizers. Probably more chance of Hell freezing over, then seeing a government with clear housing policy initiatives.
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Peter Stamford0
Mortgage Expert at Stamford Home Finance
In recent months, first-time buyer applications have dipped due to sky-high interest rates and hefty deposit demands. Despite more affordable homes and better wages (according to government data), the financial hurdles are still too high for many. It's about time we allowed the new generation a step on the housing ladder and the government should step in to make this happen. We need more schemes, help and ways to make deposits achievable. Let's make the dream of owning a home a reality again.
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Ranald MitchellVerified
Director at bad credit mortgage specialists Charwin Mortgages
There has been plenty of uncertainty amongst first-time buyers, especially in a rising rate environment. It is a big step to take and with many finding it hard enough to scrape a deposit together, it is the mortgage market that needs to adjust to enable home ownership. We need more low-deposit schemes and better pricing from lenders. Government intervention is not the answer.
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Aaron StruttVerified
Product and Communications Director at Trinity Financial
Many first-time buyers are putting off getting on the property ladder until next year. The suspect mortgages will be more affordable then and property prices may well be more stable. Mortgage lenders are currently offering cheaper rates to people purchasing rather than remortgaging as they try to stimulate the market.
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Elliott BensonVerified
Owner at Sett Mortgages
Totally depends what area you operate in, I am in Leeds and 75% of the mortgages I do are for first time buyers. Mainly with 5% or 10% deposits. There is also now the zero deposit scheme and I am noticing more interest in buying now that fixed rates are falling
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Graham CoxVerified
Director at Bridging Hub
Enquiries from first-time buyers have plummeted in the last few months, and it's hardly surprising with mortgage rates so high. And of course, they underpin the whole property market, which is part of the reason why house price falls are accelerating. The good news for those looking to buy their first home is mortgage rates are also starting to fall again.

The best thing the government can do to help first time buyers is to do nothing and let house prices fall back to an affordable level. No help to buy, no stamp duty holidays, or any other intervention that only exacerbates the problem by artificially inflating prices.
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Scott Taylor-Barr0
Principal Adviser at Barnsdale Financial Management
Given we've had such a sustained period where mortgage rates were 1% or 2% is hardly surprising that rates of 4% or 5% would make many younger first-time buyers pause, they seem high, as they've never seen mortgage rates at this level. However, if the thinking is that rates will go "back to normal" that pause could be a very long one; rates of 4% or 5% are more in line with the average mortgage interest rate over the longer term, so it could be said that we have now gone back to normal, following a long period of ultra-low rates.
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Charles Breen0
Founder at C B
We are seeing a lot of activity at the moment with first time buyers, they are not in a position at the moment to pull the trigger and buy but they are making enquiries about their affordability, working out where they will get deposits, and reaching out to do the groundwork.
This is all good signs for the next couple of months and the longer we have stability and rates remain broadly stagnant or keep reducing this will keep building the certainty that the first-time buyers crave. This could make for a very good start of the year
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Steven Hargreaves0
Mortgage and Protection Adviser at The Mortgage Co
We have experienced a downturn in First time buyers in 2023, this is down to several points, high property prices, press indicating property prices will fall and interest rates increasing.
As we go into Autumn 2023, we have seen property prices drop during 2023, however, we are now seeing interest rates reducing, week on week, lenders are battling to offer the cheapest rates and entice first-time buyers to go with them. Properties are becoming more affordable, both to buy and mortgage, hopefully, this will provide some positive needed news for First Time Buyers to get on the housing ladder and to home movers to stimulate the housing market.
We do not need gimmicks from the government, we have LISA, First Homes Schemes, Help to Buy Mortgage Guarantee schemes, Right to Buy, Right to Acquire and Shared Ownership. We need the stability of interest rates, stability or levelling out of house prices without the hullabaloo in the press that property prices will continue to fall.