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First-time buyers

Journalist: Anna Sagar, Mortgage Solutions / Specialist Lending Solutions

ended 25. October 2022

Looking to speak to mortgage brokers about first-time buyers and product choice. 

  1. Do first-time buyer clients have sufficient product choice?
  2. Are lenders withdrawing higher LTV products more often than lower LTVs?
  3. What are the main challenges affecting first-time buyer and will they worsen? 

5 responses from the Newspage community

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Rob Peters
Principal at Simple Fast Mortgage
There is certainly less choice for first time buyers, both in terms of products on the market, and also as a result of affordability due to higher interest rates. Many lenders chose to withdraw their high LTV products over the last couple of weeks but we are now seeing these slowly returning to the market. For instance, Accord have brought back their 95% product albeit starting at 6.71%, but many other lenders have not yet followed suit. The other issue is that mortgage affordability is much tighter today than it was three months ago. This is because interest rates have increased, and lenders are factoring in a higher cost of living. Ultimately this makes it harder for first time buyers to get a mortgage, and with a vast gap between earnings and the average house price in the UK, even a drop in property pricest might not be enought to solve this problem.
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Imran Hussain
Director at Harmony Financial Services
Do first-time buyer clients have sufficient product choice? There are plenty of products on the market for first-time buyers the issue is finding properties within budget or within a specific location, we will see 5% deposits come and go from the market over the next 12 months whilst lenders mitigate risk against any drop in property prices. The biggest challenge for first time buyers is affordability those on lower incomes will find it a challenge with rising rates and the cost of utilities rising.
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Sabrina Hall
Mortgage Adviser & Protection Adviser at Kind Financial Services
I'm not seeing higher LTV's being withdrawn more but what I'm seeing is that difference in the rates becoming so significant that it can price first time buyers out of the market. Lenders do still want to lend but pricing and affordability are really pricing first time buyers out of the market. Whilst the cost of living crisis continues and inflation increased I can only see this continuing to be an issue and may even get worse as lenders factor in the general costs of living into their affordability calculators. Lenders are often making significant assumptions on a clients spending based on the office of national statistics figures which is factored into the calculators they use.
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Mark Robinson
Managing Director at Albion Forest Mortgages
I think First Time Buyers have enough choice currently. Lenders are often reducing their low LTV product ranges, so people are all selecting from the 80%, 90% or 95% ranges. The main issue for First Time buyers is likely deposit. The government should tackle this issue. Maybe guarantee 2.5% of the mortgage so lenders can offer 97.5% products. House prices have risen massively over time and a 5% deposit now is dramatically more than 15 years ago. Not to mention that wages have not increased in anywhere nearly the same ratio.
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Alastair Hoyne
CEO, Finanze Capital at Finanze Capital
1. There are still a lot of products for first time buyers such as Nationwide’s helping hand and HSBC’s FTB product. Of course the rates on these products are now much higher than they have been in the last few years which could make it difficult for FTBs to borrow the amount they need, but it’s a very positive sign these products are still available. 2. Yes, however this mainly applies to specialist lenders which are now capping LTVS at 55-65% most of the highstreet lenders are withdrawing their products evenly across the board with at least a few offerings in each section still available. There are still at least 24 lenders offering 90% LTV which start at rates of 5.49% for 5+ year fixed deals. Even at 95% LTV you have at least 16 lenders offering products starting at 5.95% for 5+ year fixed deals. 3. I think the main challenges for first time buyers is going to be affordability, our property market is very robust so although interest rates are rising and we would expect this to be reflected in property prices decreasing we have not yet seen that. This means first time buyers still need to borrow a larger amount however with higher rates the amount they can borrow is going to be less as the monthly payments will be higher, to couple this with the cost of living crisis its harder now than every to save for a deposit. I think these will worsen unless we see a decline in property prices.