The Building Societies Association (BSA) has called for a radical overhaul of the housing market to assist first-time buyers. A report commissioned by the association finds an overreliance on parental financial assistance and the need for dual incomes to secure a mortgage, leaving many unable to purchase their first home.
Authored by Neal Hudson, a housing expert, the report asserts that the dream of homeownership is increasingly out of reach for individuals without the ‘Bank of Mum and Dad’ or for those with single incomes. As of March 2024, a third of the population doubts their ability to buy a home.
The report identifies the major hurdle for first-time buyers as affordability. The BSA’s Property Tracker Report has highlighted the increased difficulty of meeting mortgage repayments following recent interest rate rises.
While building societies are key contributors to the first-time buyer mortgage market, their capacity to help is stifled by existing regulations. The BSA is urging the government to commit to making homes more affordable, available, and tailored to individual needs. They are demanding an independent review to develop a strategy to increase the number of first-time buyers, to be published and actioned within 12 months.
The BSA also advocates for a review of the regulatory framework that has prioritised financial stability over homeownership since the financial crisis. This includes reevaluating the availability of 95% loan-to-value mortgages and the cap on high loan-to-income lending, as well as considering the needs of an ageing population in the mortgage market.
Paul Broadhead, head of mortgage and housing policy at the BSA, stresses the gravity of the situation: “Becoming a first-time buyer is possibly the most expensive it has been over at least the last 70 years, but a properly functioning housing market is dependent on first-time buyers being able to afford their first home. Whilst building societies are creating bespoke, targeted innovations within the current regulatory framework, new thinking and radical changes are needed.”
Broadhead emphasises the lack of a simple solution to increase the number of first-time homebuyers. He concludes, “But there are many things that can help to fix the broken housing market. That starts with changes to regulations and support schemes that not only help today’s first-time buyers, but don’t fail future generations.”
This call to action is supported by the largest building societies, including Nationwide and Coventry, highlighting a collective push for ‘Age old problems, modern solutions: a roadmap for change’.
Reaction
Rachael Sinclair, Nationwide’s director of mortgages and financial wellbeing:
“Getting onto the property ladder remains as tough as ever, with our latest research showing that one in five prospective homeowners don’t think they’ll be able to buy until their forties. Collaboration is key if we are to resolve the first-time buyer conundrum and is why we are pleased to have worked with the Building Societies Association on this report, which calls for an independent review of the first-time buyer market. Without a collaborative approach, we risk the wheels spinning on the homeownership crisis indefinitely.”
