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First time buyers - outlook for 2024

Journalist: Emma Simon, Mortgage Strategy

ended 19. January 2024

I'm looking for comments for a feature for Mortgage Strategy on first-time buyers - and whether the outlook is now looking more positive as we move into 2024. General comments welcomed - but also will be looking at the following specific issues: 

  1. Are lenders cutting rates on mortgage deals with higher LTV products?  If these havent' been at the vanguard of recent rate cuts - would you expect this to start happening in the next month or so?
  2. Do you expect mortgage rates fall further even if the Bank of England decides on a realtively long period of keeping the Base Rate at its current level? 
  3. Is a softening housing market helping first time buyers? Or have the relatively small price falls made little difference - given huge increase in property prices over the past two decades and  the signficant hurdles FTBs face in terms of saving for deposit/ affordabiity? What sort of price fall might be needed to signficantly help first time buyers – and would this  simply  collapse the housing market / cause more widespread problems? 
  4. Are lenders being flexible enough when it comes to affordability tests. Is there a need for greater product innovation in this area? 
  5. Is that market becoming more polarised between first-time buyers who have some form of parental help (so can get on ladder) and those who do not so remain in rented accommodation for far longer (potentially not getting on housing ladder at all). Is this sustaianble? 
  6. As we are in an election year - what would you like to see any new government do (rather than simply pledge) to address these issue? 

Aany comments, even on just a few of these points, gratefully appreciated. It would be great if I could get any comments back by close of play Thursday (18 January) - though could accept some on Friday, as I will be writing the feature up then and over the weekend. 

Many thanks 

Emma Simon 

 

 

7 responses from the Newspage community

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Editor
Ross Lacey
Director & Independent Financial Adviser at Fairview Financial Management
We specialise in mortgages for first-time buyers and it's almost always the case that they have above-average income and/or a deposit that's come from inheritance or a gift from parents.

We'd love to see more innovation with 100% mortgage products and ways in which those who are currently renting could instead be putting that money towards building equity in their own property.

However, we often speak to first-time buyers who have underestimated the impact of any credit commitments they have on their borrowing capacity, so it's key to speak to a broker as early as possible to understand what's viable.
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Richard Jennings CeMAP
Founder & Managing Director at Richard Jennings Mortgage Services
Lenders are definitely reducing their rate on products aimed at First time buyers and at higher LTV bandings. Analysts predict BofE rate to reduce during 2024 and so the recent pricing war of lenders I anticipate will continue throughout the year as lenders react to base rate, swap rate competitors pricing moves. House prices have levelled off but we are certainly not seeing any real reductions that would bring significant benefits to first time buyers and so we anticipate this segment of the market will continue to struggle to raise the required deposits to benefit from the better priced, lower band LTV ranges.
Bank of mum and dad we expect to continue to be a big contributor to the housing and mortgage economy during 2024. Government schemes could replicate the First Home Fund from Scotland which proved a huge success in each of the years it was available, in its final year becoming fully subscribed within a week of launch.
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Lee Gathercole
Co-Founder at Rebus Financial Services
We haven't seen as many rate reductions for higher LTV products I suspect it will come once we have a longer period of calm. If the Bank Of England holds interest rates banks will become more and more confidence to reduce fixed rates.

It is still going to be a tough market for first-time buyers despite rates dropping of late as it stands property values haven't dropped as much as they thought there is going to have to be a considerable drop in property values i.e. 10% -20%. Unless a new scheme similar to the help to buy scheme that can help first time buyers get onto the property. This again would need to be taken with some serious consideration as we don't want the help to buy scheme to raise property prices further.

Lenders are going to have to really step up if we are to see more first time buyers in the market, affordability rules will someone have to be loosened.

After the election whoever is holding the baton we are going to need to see something innovative. good luck!

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Gary Bush
Financial Adviser at MortgageShop.com
UK lenders have in the main been dragging their feet in dropping the higher risk/high loan to value rated deals - finally now however we are starting to see much-needed attention to these low deposit applications. We are factoring in, based on the current factors, for the Bank of England to lower the base rate, even by .25%, in its March 21st 2024 meeting, fingers crossed. We don't see masses of price drops in the property market, on the whole, we are seeing still numerous applicants chasing the same properties. Thankfully, with the lower of Swap rate situation for the past month, we are seeing lenders rejig their black box underwriting systems to fall in line with predicted interest rates - so affordability is now less of a problem than during most of 2023. We'd like to see the government stay away from meddling again in the property market, we view Help to Buy as a weight around the necks of a lot of borrowers in the last decade - with the repayment of equity loans creating problems.
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Matt Halder
Managing Director at Threshold Mortgage Advice
In the last week, rates at 95% and 90% have been reducing, for example 0.35 reduction from Halifax at 95%. Lenders have the scope to lower these rates but will always counteract high loan to values against the risk of default, arears and repossession. Therefore, the rates at these higher LTV will reduce with caution compared to 60% loan to value.

Swap rates have factored in 3 to 4 base rate reductions this year. Even if the base rate reduces this may not affect the rates currently provided by lenders as they have factored in a reduction already. If the base rate doesn’t fall in line with expectations, then mortgage rates will edge upwards once again. We must factor in lenders appetite to lend, which is also pushing down interest rates. Perhaps when lending targets are met, we may also see lenders keen to not to have a market leading rate which could produce increasing interest rates.
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Rhys Schofield
Brand Director at Peak Mortgages and Protection
The outlook for first time buyers is definitely rosier in 2024. Lower rates swing the needle even further towards owning your home being a very sound financial decision vs. renting.

It will be interesting to see what the government comes up with in an election year to try and win votes. The reality I fear will be some sort of short term sticking plaster for a quick win (or just come up with a way to blame immigrants/trans people/the BBC) rather than any long term planning to address the long term lack of housing stock in the UK.
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Austyn Johnson
Founder at Mortgages For Actors
Without doubt, 2024 will be a good year for FTB's, with rates finally falling and the market moving well, they wont be able to wait any longer. I'm sure thousands have been waiting over 2023, for the rates to fall so their affordability goes up. Now is their time! Dont forget the protection!