Solutions for a new generation of First Time Buyers


The gulf between generation rent and those fortunate enough to have made their first step onto the housing ladder is finally reducing after several years of a tough environment for first time buyers.

 For most young people, the biggest barriers to home ownership are the difficulty of raising a sufficient deposit and of passing lenders’ tough affordability tests. High rents are only making matters worse, giving aspiring buyers little left at the end of the month to put towards a down payment on their first home.

For these frustrated renters, there is a bitter irony in the fact that if they could only get on the housing ladder they would find themselves better off. They would actually spend a lower portion of their income each month on keeping a roof over their heads.
The English Housing Survey recently found that home owners spend just 18% of their income on housing costs, while private renters pay nearly double that at 34%. Even people in the social housing are spending more of their income on rent than home owners at 37%.

 New mortgage regulations came into play in 2014 to address the poor-quality lending of the boom years before the credit crunch. These rules which were brought in as part of the Mortgage Market Review, were designed to prevent borrowers falling into payment difficulty and, ultimately, losing their homes. When assessing affordability, lenders will now consider factors such as utility bills, council tax, insurance costs, credit card payments as well as leisure spending such as holidays, meals out and shopping for clothes. They will also look at the fact that the applicant is already managing the high cost of rental payments when a new mortgage repayment is almost certainly a lower cost.

However, despite the struggle to prove they can afford mortgage costs, there is finally light at the end of the tunnel for first time buyers who are welcoming Government help via the latest Stamp Duty concession giving relief of up to £5,000 on purchases up to £300,000. It is thought that up to 70,000 purchasers have already enjoyed this relief. Alongside this, the Help to Buy scheme has helped over 150,000 first time buyers to purchase their new build homes.

Kate Blissett, Mortgage Analyst at Private Finance, says: “The tough first time buyer market was given a boost with the announcement of stamp duty relief last Autumn, and lenders have recognised the need to help this crucial sector of the property market.  As such, there are now 260 products lending at 95% loan to value whereas just a few years ago this was virtually zero. In addition, the popularity of ‘joint borrower, sole proprietor’ mortgages has risen, allowing first time buyers to borrow with their parents securing the stamp duty exemption. Lenders are using more creativity and flexibility to come up with products that really support first-time buyers. The increase in first-time buyers has a knock-on effect on the whole housing market, increasing activity further up the chain.”

For more information about this and any other mortgage products contact us on 0207 317 2820 or You may also find our calculators useful for some of your mortgage and purchase cost considerations.

Solutions for a new generation of First Time Buyers


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© Private Finance Limited, 2019. Private Finance provides independent mortgage advice and arranges individual mortgage solutions for clients. Private Finance is a trading style of Private Finance Ltd, 29 Lincolns Inn Fields, London, WC2A 3EG, registered in England no. 3855776 and its Appointed Representatives. Private Finance Limited is authorised and regulated by the Financial Conduct Authority (FCA registration number 310566).

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