New research from the Building Societies Association (BSA) shows that many aspiring first-time 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.
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.
Building societies have long been champions of first-time buyers. They continue to lead the way with flexible, people-focused mortgage innovation which reflect the realities facing modern first-time buyers, such as high house prices and non-traditional career paths. Options, including very low or no deposit loans, extended and flexible repayment terms and shared ownership mortgages, are helping more people turn the dream of owning a home into reality.
Building societies can also offer tailored and practical solutions for individual first-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. The majority (53%) say a mortgage adviser is the best source of information, followed by financial providers (43%).
Paul Broadhead, Head of Mortgages and Housing Policy at the Building Societies Association said:
“Too many aspiring first-time buyers assume homeownership is off the table without ever checking what is actually available to them. This research shows that’s a mistake! When people explore the kinds of mortgages building societies offer, many realise they could buy sooner than they thought.
“Building societies have been helping people into their first homes for more than 250 years and that hasn’t changed, we’re still innovating, still flexible and still focused on real people and the challenges they face.
“A simple conversation with a building society or mortgage broker could open doors that you may not realise were there.”
Economic Secretary to the Treasury Lucy Rigby KC MP said:
“Too many people are giving up on owning a home before they’ve even spoken to a lender - believing that getting the keys to their own place is out of reach. But now that there are more attractive and flexible products on the market, it’s right that people are encouraged to have another look to see if there might be an option which works for them.”
