Half of potential buyers also unaware their borrowing power may have increased by £40k
The need for better financial education for first-time buyers has again been highlighted with new research.
The Mortgage Advice Bureau (MAB) found that half (50%) of aspiring first-time buyers are unaware that borrowing power has improved, with some able to potentially access £30-£40k more than they could 12 months ago, thanks to easing mortgage affordability stress tests, lender changes and improved rates.
Meanwhile, the Iress Financial Readiness Index shows that first-time buyers could shave more than five years off the average age at which they buy their first home, from 38.7 years to 33, if they engage with financial planning and advice earlier.
Lack of knowledge of 5% deposit mortgages
MAB’s research also found that nearly three-quarters (73%) are unaware that 5% deposit mortgages are available. It follows a survey of 1,001 renters who plan to buy their first home this year.
It found that buyers spend an average of 6.04 years saving for a deposit, with more than a quarter (27%) saying that saving for a deposit remains the biggest barrier to buying.
The research also found that just under half (47%) of buyers-to-be would buy immediately if their mortgage repayments matched their rent.
Iress’ managing director for UK sourcing, Jennifer Raffery, said: “Homeownership is often seen as something that happens later in life, but our research suggests many people could be closer to getting on the property ladder than they realise.
An opportunity to engage earlier
“For advisers, it creates an important opportunity to engage clients much earlier in their journey. With access to the widest range of products and when supported by technology that helps them assess affordability, compare options, identify suitable outcomes more efficiently and even submit mortgage applications faster, brokers are in a strong position to help buyers understand what may be achievable in today’s market and secure the best outcomes on their behalf.”
Rachel Geddes, strategic lender relationship director at Mortgage Advice Bureau, said: “For many first-time buyers, the biggest challenge isn’t just saving for a deposit – it’s knowing whether homeownership is actually within reach. What this research shows is that many aspiring buyers may still be making decisions based on outdated assumptions around their borrowing potential, as lenders continue to introduce greater flexibility into the market.
“While affordability pressures certainly remain, speaking to a mortgage adviser earlier in the process can help buyers better understand the options available to them, rather than ruling themselves out too soon.”
