It has become increasingly difficult for first-time buyers to get on the property ladder in recent years, with many stuck in the cycle of paying extortionate rents to private landlords and unable to save for the required deposit.
A report from the Building Societies Association has revealed that the conditions for first time buyers are the toughest they have been for 70 years, with many reliant on needing two high incomes or a boost from the ‘bank of mum and dad’.
Despite this, the desire to own a home is still there, and many potential first-time buyers are willing to make changes to their short-term circumstances, such as moving in with parents or changing their job, if it ultimately means they get their dream home.
This determination to buy in such tough conditions is one of the reasons why the first-time buyer sector remains a fundamental part of the housing market, and one that needs more support in order to thrive.
In its 2024 manifesto, Labour made a promise to build 1.5 million more homes in the next five years, and support 80,000 young people get on the housing ladder by giving local people ‘first dibs’ on new developments.
It also said it would extend its permanent Freedom to Buy Scheme to help working people who struggle to save for a large deposit.
While this is a move in the right direction for the longer term, there are concerns that not enough is being done by the Government to help first-time buyers in the short-term.
This doesn’t look likely to change either in the near future, as Keir Starmer has recently warned of a ‘painful’ Budget coming in October, leading many to believe that tax increases are on the way.
The Prime Minister has said that taxes on working people – income tax, VAT and national insurance – will not go up, but he has not ruled out raising inheritance tax, capital gains tax and taxes on pensions.
While these changes may not directly affect the average first-time buyer, it could have a knock-on effect on the help that they get from the ‘Bank of Mum and Dad’, who could find their financial situation a little tighter in November.
Without that shortfall being filled by mum and dad, lenders will have to step up and offer more flexible range of options to support first-time buyers, many of whom may find themselves unable to buy otherwise.
Lending with purpose
The purpose of a building society is to put people in their own homes, and data shows in 2023 there were 293,339 first-time buyers in the UK.
In 2022-23 the average deposit amount in England for first time buyers was £53,414 and 87% of buyers relied on savings as their primary source for their deposits.
According to 2024 data from Moneyfacts, first-time buyers comparing mortgages will find building societies on average price lower than market averages.
In 2024, first-time buyers able to put down a 10% deposit were being offered the average rate of 5.76% by building societies, on a 2-year fixed mortgage, significantly lower than the 6.20% being offered by other lenders.
Cambridge Building Society not only offers competitively priced deals we have a number of products and schemes available to support first time buyers in making their homeowner dreams a reality.
Whether they are struggling to raise a deposit or looking at a shared ownership property we can offer Joint Borrower Sole Proprietor mortgages where up to two family members can help support the purchaser, a 95% product range for houses and second hand flats with 85% borrowing available for new-build flats, Shared Ownership mortgages where we can lend 95% of the share regardless of whether a house or flat is being purchased. With all of our offerings can use gifted deposits from family members to support the purchase.
Our purpose has been to support people wanting to own their own home for over 150 years and we remain committed to doing so.
Kathy Bowes is intermediary manager at Cambridge Building Society
