Thursday, February 13, 2025
HomeMortgageHow can brokers help first-time buyers to navigate the market? – Hall

How can brokers help first-time buyers to navigate the market? – Hall



For many first-time buyers (FTBs), the path to homeownership is often a challenging one.

Hurdles such as rising house prices, which have outstripped earnings growth, and the higher cost of living are currently preventing many FTBs from getting onto the housing ladder.

Yet, owning a home remains a priority for this group, and creating opportunities for brokers to help them to navigate an increasingly challenging market and realise their homeownership aspirations is a priority of many lenders, including Kensington Mortgages.  

 

A difficult landscape for FTBs 

The mortgage gap, the difference between what a typical FTB can afford and the size of the mortgage they need to purchase a property, has increased significantly in the last decade. The average house price for an FTB has climbed by 52%, while the average income of an FTB has risen by 26%, from £29,181 to £36,885.  

This has created a £43,607 mortgage gap, representing an increase of 552% over the past 10 years. Currently, an FTB would need to earn double the average UK household income to buy a home in the UK. Upcoming changes to stamp duty present an additional challenge for FTBs who could face increased homebuying costs from April this year after the cost threshold introduced in 2022 is removed.  


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A shortage in housing supply and ‘under-occupancy’ are also systemic issues for FTBs. Annual housing supply in England reached 221,070 net additional dwellings in 2023-2034, representing a 6% decrease relative to 2022-2023, and far below the estimated 300,000 new homes needed per year to match population growth. Some 85% of owner-occupied homes in England and Wales contain one or more spare bedrooms, restricting the availability of larger homes over time and compounding issues relating to the lack of affordable housing. 

In such challenging conditions, the average age of an FTB has risen to 33.5 in England, up over three years since 2007, and has surpassed 35 in London. Buyers aged 18-34 are also three times more likely to rely on government schemes, while many successful FTBs require parental support or two higher than average incomes.  

 

Still determined 

Nevertheless, homeownership aspirations remain strong among FTBs, with this group representing the largest buyer demographic in 2024, accounting for 36% of sales from October. Almost three-quarters of people in the UK (71%) who do not own their home say they still aspire to do so in the future, amounting to 7.5 million people.  

While addressing the hurdles facing FTBs will take time, education can play a crucial role in enabling them to take the next step on the path to homeownership. Being informed about both the challenges and opportunities within the housing market could help them to make decisions with greater confidence.  

In this regard, mortgage brokers have a crucial role to play in continuing to improve awareness of the variety of solutions available and in providing expert advice for FTBs regarding their individual circumstances.  





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