Rising interest rates gentrifying first-time buyer market

The primary hurdle for first-time buyers is accumulating a sufficient deposit, which is nearly impossible while renting unless they have family support. To bridge this gap between those with and without resources, the market needs meaningful price reductions and more deposit-boosting initiatives. While education plays a role, dispelling the misconception that huge deposits are always necessary, a coordinated effort is needed to promote informed decision-making, emphasizing the importance of consulting with a mortgage broker before anything else.

We have seen the Bank of Mum and Dad being much more prevalent in the last 3-4 years, gifting deposits has become almost a necessity in today's housing market with property prices being so high.
In the last couple of years, we have had access to 95% mortgages with the government-backed 95% Mortgage scheme, we have also had some innovative products from lenders such as Skipton with their Track Record Mortgage for First Time Buyers in expensive rented accommodation.
However, you do feel it is tough for First Time Buyers to save a deposit, with such expensive rents and property prices being so high.
It would be good to see some stability in the housing market with both property prices and interest rates.

Whilst I think that this may be the case to a degree, it's predominantly due to a lack of knowledge. Whilst many consumers assume you need a whacking great big deposit that simply isn't true for most first-time buyers who we talk to. Ultimately it all comes down to education and until there is a joined up campaign to say 'Thinking about buying? Just talk to a broker before you do anything else' we'll be fighting an uphill battle.

With rapidly rising rents, first-time buyers are caught between a rock and a hard place. They can't save enough for a deposit and buying costs because so much of their income is going on rent.
What we need is a modern "Right to Buy". The government needs to look at a first-time buyer loan package that provides greater than 100% lending to value. Using affordability calculations will reduce the risk of future defaults. This will level the housing playing field. We need to move away from the negative connotations of negative equity and instead look at the possibility of home ownership that it would offer to those who otherwise will always be caught in the rental trap.

A significant portion of our first-time buyer cases finds support from the "bank of mum and dad." It's not surprising at all, considering the upward trajectory of interest rates and the increasing cost of living. Kudos to them for securing that assistance!

Not at all. Sometimes the bank of M&D comes into play, but it always has. Clients choose to buy when they have a deposit saved up, or when they haven't. If they haven't then its a 100% mortgage or help from family.

Rising interest rates are forcing first time buyers arms in making the “right decision”! Traditionally we have also entered conversations with first time buyers very relaxed as most know what they want. We would explain the pro’s and con’s of various products and they would have their heart set on their dream home.

Fast forward to 2023 and the conversations are very different! First time buyers are fully aware of the interest rate increases and reduced affordability and are stairting their conversation with…”we’ve found a house but want to know how much it will cost per month?”

Fantastic! First time buyers are considering their monthly costs instead of following their heart and over stretching themselves financially.

This is however having an impact on your typical first time buyer properties and their values.