First-time buyers now make up a bigger proportion of the mortgage market, indicating that new buyers are taking advantage of a more favourable environment.
That is according to Alexander Hall, which identified the trend in its internal application data over the past three years.
The figures show that first-time buyer mortgage applications made up 28.7% of all activity seen by Alexander Hall in 2024. Given that total lending from Alexander Hall applications across all client-types was in excess of £2.25bn this demonstrates the significance.
That’s a greater share than in 2023, when first-time buyers accounted for 23.3% of applications, as well as 2022, when they took 22.3% of the market.
Total mortgage applications remained steady over the period, despite first-time buyer applications rising by nearly a quarter (23.1%) in 2024. This indicates that new buyers are making up for falling application numbers from home movers and investors.
Improving conditions
The rise of first-time buyers reflects how conditions are improving for the cohort.
The Bank of England base rate has been declining since July 2024, when it stood at 5.25%, with it now being a full percentage cheaper at 4.25%.
Incomes are also improving, which is giving first-time buyers more spending power, while house price growth has been modest since reaching double digits in 2022.
Indeed, recent research found that first-time buyer affordability is now at its best level for 10 years, as the average first-time buyer in 2024 had an income of £31,717 against a typical house price of £226,744.
At the end of 2024 UK first-time buyers were given a strong incentive to get deals finalised due to the expiry of the higher stamp duty thresholds.
Between 31 October 2024 and 31 March 2025 first-time buyers paid no stamp duty on the first £425,000 of a property purchase, provided the total property price was under £625,000. Following the end of that period the minimum threshold has now been lowered to £300,000.
Other trends
Alexander Hall’s insight also shows that first-time buyers utilising the broker used fewer mortgage lenders in 2024, at 31 lenders compared to 35 in 2023, despite there being more applications. This suggests there’s strong competition between a smaller number of banks and building societies. More competition from fewer players is likely to be positive for new buyers, as that will contribute to falling rates.
The majority of first-time buyers (61%) opted for a 2-year fixed rate in 2024 compared to 37.5% in 2022.
This reflects optimism that the central Bank will continue cutting the base rate, which could result in cheaper mortgage rates in two years’ time and, currently, there are already some 1,230 2-year fixed mortgage products available to first-time buyers according to MoneyFacts.
Stephanie Daley, Director of Partnerships at mortgage advisor, Alexander Hall, commented:
“First-time buyers are becoming more prominent players in the mortgage market, as conditions are improving. Rising incomes, more modest rates of house price growth, and lower mortgage rates are all making the market more favourable.
It’s also fair to say that first-time buyers, in particular, have benefited from a greater range of lender improvements and product innovation in recent years, which has provided them with a greater range of ways to climb the ladder.”
