Competitive pricing and a variety of options meant that this community was benefiting once again from increased product choice. What is more, the momentum many lenders have already achieved in terms of reinstating product choice for first-time buyers is set to continue as more start to resume 95 per cent LTV lending.
Encouragingly, first-time buyers accounted for one-fifth (20.18 per cent) of all mortgage searches in January – an increase on figures seen in previous years – further highlighting that appetite among this community is returning as product choice improves. The government’s 95 per cent mortgage scheme will also go some way towards encouraging the major banks to step back into the high LTV market, which will further the momentum achieved in this space.
Other forms of govt support still available
What is also reassuring for first-time buyers is that other forms of government support are still available to help them raise the funds needed to purchase their first property.
The Help-to-Buy scheme, for example, has been hugely beneficial in supporting homebuyers since its launch in 2013. Indeed, more than 278,000 homes have been bought with a Help-to-Buy equity loan over this period, and 82 per cent of all purchases have been made by first-time buyers.
With a revised Help-to-Buy scheme now in place until 2023, there is no doubt that this will continue to be popular among first-time buyers. As this community grapples with the economic impact of the pandemic, it is likely that many prospective buyers will look for additional support over the coming years to help them with their property purchases. Help-to-Buy will play an increasingly important role here.
House deposits more achievable for some
The long-held challenge of saving enough for a house deposit has historically prevented many first-time buyers from purchasing their first home.
However, many young people in stable employment have been able to save their disposable income during this period. A decrease in spending as a result of lockdown restrictions has meant that younger workers have been able to set aside income they would have otherwise used for non-essential goods – something that has enabled some to save more for a house deposit.
Therefore, following the crisis, it is likely that some first-time buyers whose finances are in better shape than before the pandemic will be in a much stronger position to take their first steps onto the property ladder.
Growth of intergenerational lending
For others, saving for a deposit may have been made harder.
For this group, intergenerational lending could play an important role in helping them achieve their homeownership goals over the coming years. In 2020, more than half (56 per cent) of those aged under 35 received financial support from the 'bank of mum and dad', according to research from Legal & General.