Copy article

What can be done to help first-time buyers?

Journalist: Emma Simon, Mortgage Strategy

ended 11. November 2023

I'm writing an article on the first-time buyer market for Mortgage Strategy. Looking for comments on the following points 

  1. Are lenders starting to relax LTV requirements - notice Saffron for Intermediaries recently offered two-year fixes at 90 and 95% LTVs. Are other lenders following suit - is there more appetite to lend at higher LTV for FTBs? 
  2. Is the number of FTBs increasing - with interest rates stabilising, prices edging downwards, and ongoing problems in the rental market? 
  3. Are the Bank of Mum and Dad still the main way FTBs are getting on the housing ladder?  Has the cost-of-living crisis/ rising interest rates / potentially falling house prices limited people's ability to ‘gift’ deposits.?
  4. Are you seeing more demand for family-backed/ family-assist products?
  5. What else could lenders do to support FTBs market - longer mortgage terms perhaps? 
  6. Has there been inreased demand to secure  Help To Buy loans before it closes in Dec? 

Any other observations about first-time buyer market gratefully received. I am looking for comments by close of play on Thursday 16th November

Many thanks 

Emma 

6 responses from the Newspage community

Copy all

Copy

Editor
Stephen Perkins
Managing Director at Yellow Brick Mortgages
As lenders continue to fight for market share and to reduce the shortfalls in their year-end lending targets some are competing on rate, others are opening up products to higher Loan to Values and some are boosting affordability or relaxing criteria. All these scenarios benefit First Time Buyers, and the market is certainly seeing plenty of enquiries from them, but many seem to be sitting on their hands waiting for property prices to fall or rates to reduce some more. Even in light of the above, it is still not easy to buy your first home in the current economic climate without usually sizeable support from the Bank of Mum and Dad or other parties.
Copy

Platinum
Elliott Culley
Director at Switch Mortgage Finance
With swap rates reducing it would be good to see more action in the higher LTV products as this is where the majority of first-time buyers are placed. Raising a deposit is difficult so most will have between a 5-10% deposit. Lenders have been very quick to reduce their lower LTV products, but usually, the 90-95% LTV products lag behind and either stay the same or reduce very slightly. This is understandable as house prices have been reducing and lenders don't want to get into a situation where they can't recoup their money if necessary. However until the rates at the higher LTVs come down more, we will find the mortgage market takes a little bit longer to fully recover.
Copy

Dan Osman
Head of Later Life Lending (Age 55+) at UK Moneyman
The amount of later-life borrowing applications we are seeing to provide support for first-time buyers has fallen as people focus on their own immediate needs which they face as a result of the cost-of-living crisis. There is also a lot of wait-and-see going on with older clients more willing to fund gifting from savings in the short term rather than turn to borrowing which is likely to last until the current and medium-term rate situation becomes normalised for people.
Copy

Gary Boakes
Director at Verve Financial
Help to Buy on 2nd hand homes would be a fantastic incentive for FTB. The issue that some people now have with HTB, was that they felt a lot of people pushed themselves too much and now struggling when the rates have increased, that could be easily solved by making the affordability based on 3.5-4x income instead of the previous 4.5. The scheme could also be restricted to flats and 2 bedroom properties to allow more movement at lower levels and hopefully have a knock on affect for more homebuyers upsizing. Having used the HTB scheme in the past it was fantastic for myself and family and since it ended it has left a gapping hole for FTB and the new build market, but i think we should be thinking bigger picture and move it to 2nd hand homes/flats.
Copy

James Bull
Mortgage Broker at JB Mortgages
The biggest barrier for first-time buyers is undoubtedly saving for a deposit. Government incentives like the Lifetime ISA are a great idea but chronically underutilised. The government needs to do more to educate the public that schemes like this are available. I would also like to see more lenders follow Skiptons lead and start offering 100% mortgages. As long as the mortgage is affordable i dont see why people with no deposit should be prohibited from buying a property.
Copy

Gary Bush
Financial Adviser at MortgageShop.com
UK lenders are well and truly pushing the envelope to increase their Loan to Values to the much-needed 90/95% of the market. With 2-year fixes coming back down to where they were 6 months ago also we are seeing a revival in First Time Buyer activity with a number of these coming armed with near relative supplied gifted deposits. To be honest we are pleased at the end of Help to Buy, we think this could allow the government to focus more now on the much needed affordable housing provided by the effective Shared Ownership scheme.