First time buyer appetite remains strong

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Exploring the role of first-time buyers on the UK economy

First-time buyers (FTB) have had to navigate significant challenges with high inflation and rising interest rates over the last few years. However, an analysis released by Coventry Building Society’s latest First Time Buyer Economy Report shows that total mortgage lending to this particular market segment is projected to grow 16% in 2024, reaching £65.3 billion.

Coventry's research shows that the average age of a FTB has only risen by one year from 33 to 34 since 2022. Average house prices vary widely across the UK, ranging from £193,800 in Yorkshire to £374,100 in Edinburgh in 2023.

Where we’re going: A steady recovery

As we head into 2024, it is anticipated that transactions among FTBs will start to increase as market conditions stabilise and confidence returns to the housing market. As a result, 330,000 FTB transactions are expected in 2024, with Coventry's research predicting average loan sizes set to increase by 3% to £202,500 in 2025. Additionally, the total value of mortgage lending to FTBs is set to amount to £65.3 billion in 2024 and further increase to £71 billion in 2025.

Average FTB house price by region

Average house prices vary considerably across the country, with FTBs in or around Edinburgh reporting the highest average house price at £374,100, while those in Yorkshire paid £193,800, 31% below the UK average.

The unforeseen costs

One of the most overlooked aspects of buying a house is the unforeseen costs, such as legal fees, moving costs, mortgage and valuation fees, and stamp duty. Coventry's research found that although 77% of FTBs were aware of legal fees, only 53% were aware of stamp duty costs, and only 47% were aware of mortgage product fees before they applied for a mortgage.

Funding the deposit

Although mortgage affordability is now the main concern for FTBs looking to get on
the property ladder, according to the Building Societies Association, raising a deposit
remains a significant challenge for many. 

However, it is encouraging to note that despite rising living costs, the length of time taken
to save remains unchanged from 2022 at three to four years.


The value of mortgage broker advice

With the broker's role more important than ever in helping FTBs navigate market complexities and establish future pipeline business, it is encouraging to see that 96% of those who used a broker said they were important in the home buying process, compared to 90% in 2022. However, concerns remain that 44% of FTBs would turn to family and friends before a broker for advice on the home buying process, as family members are unlikely to have the same level of knowledge as a professionally qualified broker.

According to Coventry Building Society - Mortgage brokers have a valuable opportunity to bridge this knowledge and advice gap. As they interact with clients daily, discussing various mortgage needs, brokers can also emphasise their support for first-time buyers to clients who may be parents or guardians of aspiring homeowners. Furthermore, Coventry's report reveals a knowledge gap amongst FTBs, with 40% saying they needed more information and guidance about applying for a mortgage. In comparison, 36% required more detail on the exchange of contracts and associated costs such as legal and broker fees, the deposit and stamp duty.

Coventry Building Society’s latest First Time Buyer Economy Report: Conclusion 

With inflation set to remain high and the cost of living crisis continuing, brokers will continue providing an essential source of knowledge and targeted advice to FTBs during home-buying. Research shows that many FTBs are unaware of the associated costs of buying a house before they start their home-buying journey, which can add up to £8,300.

Here, brokers can differentiate themselves from other information sources by helping FTBs understand how and what they should be budgeting. In addition, many younger FTBs are finding it difficult to secure a mortgage. They rely on financial support from family and friends, so brokers, with access to a broader selection of products across the market and knowledge of lenders’ criteria, will continue to play an integral role in supporting FTBs onto the property ladder.

Source: All information in the article taken from Coventry Building Society’s latest First Time Buyer Economy Report: Conclusion 


Call 020 7016 0790 to secure a first-time buyer mortgage or book a consultation 

The information contained within was correct at the time of publication but is subject to change

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