Think again! First-time buyers could be much closer to owning a home than they realise
New research from the Building Societies Association (BSA) shows that many aspiring buyers could be closer to owning their own home than they think, but too many are ruling themselves out before exploring what is possible.
The findings show that almost half (47%) of people who want to buy their own home have never spoken to a lender or mortgage broker to check what options are available to them. Even among those who have, around half (46%) have not done so in the last year.
Yet when shown options available from building societies that require no or low deposits, two-thirds (67%) of those trying to get a foot on the property ladder said they would be able to buy a home sooner than they thought, highlighting a clear gap between perception and reality. These figures do not include the large number of mortgages available through major banks such as HSBC, Santander, and Barclays.
Barriers and building society solutions
More than half (59%) of today’s first-time buyers have less than £10,000 in savings and on average they think it will take around six and a half years until they are in a position to buy their first home, with one-in-three (32%) believing they will never achieve homeownership. The biggest challenges are financial, with affordability (64%) and saving a deposit (53%), cited as the main blockers.
Banks and building societies offer tailored and practical solutions for individual first-time buyers and next-time buyers, enabling many to secure a mortgage where a more rigid, more automated lender might say no.
As a result, building societies provided 35% of all first-time buyer lending. Nearly half (46%) of this was to borrowers under 30, almost a quarter (23%) to those with a deposit of less than 5% of the property price, and one-in-ten (10%) to first-time buyers aged over 451.
Why homeownership matters
For most aspiring buyers, owning a home is about more than bricks and mortar. The biggest motivations are greater stability (53%), having their own space (49%) and no longer paying rent (47%). Delays in getting on the property ladder is also having wider social impacts. One in five (20%) say they are holding back on committing to their partner or getting married, more than a quarter (27%) are postponing starting a family and around one-in-five (18%) are putting off starting a business until they become homeowners.
You don’t know what you don’t know
Getting a first mortgage can feel daunting, and many would-be buyers want clearer information. Almost half want to better understand the products available (48%) and the amount of deposit they need (44%), while one in three (29%) are unsure who to speak to first or how to improve their credit score.
Encouragingly, mortgage professionals are the most trusted source of advice according to the Building Society Association's research. The majority (53%) say a mortgage adviser is the best source of information, followed by financial providers (43%).
Aaron Strutt, product director at Trinity Financial, says: "There is so much choice in the mortgage market now that it is hard knowing exactly what is available to potential borrowers. There are more low deposit mortgages, income stretch mortgages, help from the Bank of Mum and Dad rates, made up from nearly 50+ more well-known lenders offering 7,500+ fixed and tracker rates."
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The information contained within was correct at the time of publication but is subject to change.
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