A Complex Market but Plenty of Support for First-Time Buyers

The headlines can paint a daunting picture. Last year, the average purchase price for a first-time buyer in the UK was more than £310,000. The average deposit was more than £60,000. And with the cost of living and interest rates where they are, it’s no surprise that many aspiring buyers are feeling discouraged.

Why Demand Remains Strong Despite the Headlines

But those same headlines don’t tell the whole story. In 2024, the number of first-time buyers rose 20% compared to the previous year. More than half of all UK home purchases are made by first-time buyers – the highest share on record. So despite the challenges, demand is strong, and that’s cause for optimism.

There are options out there. Our job, both lenders and mortgage advisors, is to help people understand those options and support them through the process. 

Deposit remains a major hurdle, but there are now several solutions designed to help.

At Halifax, we offer mortgages at 95% loan-to-value, with the support of a Mortgage Guarantee Scheme. That means the deposit doesn’t need to be £60,000 – it could be more like £15,000 or £20,000, depending on the property. There are also cashback products that can ease the upfront cost and help with those first few months in a new home.

Shared ownership is another good example. Buyers purchase a percentage of a home and pay rent on the rest, with the option to increase their share over time. This helps reduce the deposit needed, and it’s an area where we’re seeing a lot of activity.

Affordability Challenges and Evolving Solutions

Affordability is the second big challenge, and this is where the market is evolving quickly. At Halifax, we’ve introduced the First-Time Buyer Boost to help more buyers meet affordability criteria. The UK Government has also updated affordability stress-testing guidance, and while that’s still taking shape, it is prompting further change across the sector.

Family Support and Intergenerational Lending Options

Family support remains key for many buyers. Gifting a deposit – often from parents – is a longstanding option, but now we’re seeing more intergenerational solutions. If the Bank of Mum and Dad were a lender, it would be the tenth largest in the UK. This tells us something important about how families are working together to meet deposit and affordability challenges.

There are ways to formalise that support. Joint borrower, sole proprietor mortgages allow parents to contribute income without being named on the title. We’re also seeing concessionary purchases, where buyers purchase from a landlord or family member at a discounted price, which can reduce or eliminate the deposit requirement altogether.

And for some families, equity release or later-life lending may be a way to unlock the value in a property to support the next generation. This isn’t suitable for everyone, and advice is essential, but it’s another route that’s helping people take their first step onto the property ladder.

It’s a complex landscape, and we don’t expect first-time buyers to navigate it alone. Mortgage advisors play a crucial role here, and the earlier they engage with clients, the better. We want to help customers become mortgage-ready – even if that means starting conversations months or years before a purchase is made.

Working Together to Make Homeownership Possible

The average age of a first-time buyer is now 33 – two years higher than a decade ago. But the aspiration to own a home is as strong as ever, and the support is there for those who seek it out.

We take our responsibility seriously. At Halifax, we’re committed to working closely with intermediaries to ensure they have the tools and knowledge to guide clients through what can be an overwhelming process. Whether it’s new products, affordability updates or intergenerational lending solutions, we’re here to help our partners support their clients every step of the way.

There’s no doubt that the market presents challenges. But the demand is real, and the solutions are evolving. We need to continue working together as an industry – lenders, advisors and brokers – to make homeownership a reality for the next generation of buyers.