There’s been a fair amount of positive noise around Q1, particularly when it comes to first-time buyer demand holding up despite wider uncertainty, and on the face of it that is encouraging.
But most lenders will already know Q1 was not one consistent story, because what played out in January and February is clearly not what we saw in March. The early part of the year felt stable, with pricing more settled and product availability, particularly at higher LTVs, in a stronger place, which helped support application levels and gave first-time buyers a bit more room to manoeuvre.
March, however, was a different proposition altogether, with rates moving up, products being pulled, and lenders taking a step back to reassess, which has had a direct impact on affordability and, in some cases, borrower confidence.
So while the Q1 data is not wrong, it does need to be taken in context, because it does not fully reflect where the market sits today.
High LTV still there, but clearly under pressure
One of the clearest examples of that shift is what has happened to 95% LTV products. We are still seeing around 200 products available for first-time buyers at that level, which in itself is not a bad position and certainly better than some periods we have seen in the more recent past. I can remember a point when it would have taken you only two hands to count on your fingers the number of products available, so we have moved a long way (thankfully) from that time.
However, the drop over the course of March has been significant - at the time of writing around we are around 70 products down on the start of March - and advisers will have felt that in real time as options have narrowed and pricing became less attractive.
That is not surprising given what lenders have been dealing with in terms of funding costs and wider market volatility, but it also shows how quickly things can change and how sensitive this part of the market is to external pressures. For lenders, it is a reminder that maintaining a presence in the high LTV space requires constant adjustment rather than a set-and-forget approach.
Affordability is doing the real damage
If there is one consistent theme running through all of this, it is affordability.
Higher rates are now feeding through into lender models, and that is making it harder for first-time buyers to borrow what they need, even if demand itself has not fallen away.
That gap between intent and ability is where a lot of the friction now sits, and it is why conversations around LTI flexibility are gaining traction. Even so, lenders will recognise LTI changes on their own are not going to solve the problem, particularly if higher LTV products become less available at the same time.
This is not about one lever, it is about how all of them work together.
Using tools to keep lending moving
In this sort of market, lenders that want to stay active in the first-time buyer space need to think carefully about how they manage risk without stepping away from the sector altogether.
This is where tools like risk transfer solutions come into their own because they allow lenders to continue writing higher LTV business with an added layer of protection while optimising their capital. This can make a real difference when conditions are less predictable and we would urge lenders to consider their position.
To repeat, it is not about taking more risk, but about managing it more effectively, while still being able to support borrowers who would otherwise find it harder to access the market. That balance is going to be key over the coming months and, dare I say it, the rest of 2026.
Looking ahead, not back
There is no doubt the first-time buyer market still has underlying strength, and that should not be ignored. But lenders also need to be realistic about what lies ahead, because Q2, Q3 and Q4 are unlikely to look like January and February, and March may well prove to be a better guide to current conditions.
That means staying close to the data, but also recognising its limits, and being prepared to adapt quickly as the market continues to move.
For those that can do that, there is still plenty of opportunity, but it will require a more active and considered approach than we may have needed at the start of the year.
