Major banks to discuss first-time buyers in Treasury: "I thought first-time buyers were already the government's priority"

THE new Economic Secretary and Housing Minister will host major high street banks in the Treasury this week as the government focuses on increasing homeownership and delivering more affordable housing as part of its Plan for Change.

But brokers and property experts were unimpressed, with one describing the announcement as a “diversionary tactic” following Angela Rayner's departure and another questioning whether higher multiples should even be encouraged.

Lucy Rigby and Matthew Pennycook will call on lenders to make first-time buyers their top priority, taking advantage of the Leeds Reforms announced by the Chancellor in July to help more people with small deposits and low incomes get a mortgage.  

Those changes are expected to help up to 36,000 extra first-time buyers secure their own home in the first year alone, while the Financial Conduct Authority is simplifying mortgage lending rules such as affordability checks so that more people can borrow within safe and regulated limits. 

Ministers will call on lenders to make first-time buyers their top priority as the government accelerates mortgage reforms and builds 1.5 million new homes.

The roundtable follows the regulatory overhaul to “supercharge home ownership by letting lenders offer more mortgages at over 4.5 times buyers’ income”. 

Lucy Rigby, Economic Secretary to the Treasury, said: Helping first-time buyers onto the housing ladder is central to our Plan for Change. That’s why I’m bringing lenders together to make mortgages more accessible and highlight new options for first-time buyers so more people can finally own their own home.

Katy Eatenton, Mortgage & Protection Specialist at St Albans-based Lifetime Wealth Management, sounded a note of caution: “Anything that helps first-time buyers get onto the ladder should be welcomed, as long as it does not involve them over-stretching themselves and is done sensibly. We're seeing plenty of lender innovation on that front already.

"Many households are already skating on thin ice financially and we need to be wary of exposing people to more debt. The best way to help first-time buyers is to build more homes, not enable them to borrow more, but that's something successive governments have failed to achieve. Build more is better than asking people to borrow more and banks to lend more.”

But Riz Malik, Director at Southend-on-Sea-based R3 Wealth, was sceptical about both the meeting and the 1.5m new homes target: “I thought first-time buyers were already the government's priority? This is no more than a diversionary tactic following the Deputy PM's embarrassing departure. The 1.5m homes are pie in the sky that will never be completed under the current administration's reign. What more can be pulled out of the bag?”

Adam Stiles, Managing Director at London-based Helix Financial Partners, also questioned the government's ability to meet its 1.5m target: "Even Google and ChatGPT come up with different numbers for how many Housing Secretaries there have been since 2010. They all come in with big plans and good intentions but sadly leave within months either in disgrace or promotion.

"The government is still banging the 1.5m new homes drum with no real plan on how it will be achieved because no one stays long enough to actually understand how any meaningful changes can be made.

“Many lenders are already offering 5-6x income already depending on circumstances, but should higher multiples even be encouraged? The cost of living needs to come down in real terms for the majority of people to afford even basic living first.”

Aaron Strutt, Product and Communications Director at London-based Trinity Financial, said lenders are already targeting first-time buyers: “Most of the big mortgage lenders have been targeting first-time buyers for quite some time, particularly Nationwide and Halifax. They have also been issuing up to six times salary rather than 4.5 times income.

"Lloyds Banking Group is going to make an extra £4bn of lending available to high loan-to-income first-time buyers, following recent mortgage lending reforms. HSBC has also just started offering more first-time buyers 5.5 times salary mortgages, which is something I did not think would happen, given the bank's attitude to risk.”