Ongoing efforts are being made by the Government to push the lending sector to support aspiring first-time homebuyers, some of whom are currently facing challenges in entering the property market due to market and lending conditions. ‘Helping first-time buyers onto the housing ladder’, Lucy Rigby, recently appointed Economic Secretary to the Treasury, said, ‘is central to our Plan for Change.’
This change involves the Government working alongside lenders in order to identify ways to draw first-time buyers into the property market, thus contributing towards the Government’s overall objective of facilitating market activity.
First-Time Buyer Conditions
On average, a fixed rate for a first-time buyer is between 3.75% and 5.60%. For a two-year fixed rate for a first-time buyer, the interest rate starts from the following for these lenders: Coventry at 5.16%, HSBC at 4.94%, Lloyds Bank at 4.19%, Nationwide at 5.04%, NatWest at 5.17%, and Santander at 5.09%.
Yet difficulties persist due to the affordability challenges, for the average time to save for a deposit has consistently increased over the past two decades. Statistics show that the average time to save for a 20% deposit on a median-priced home in 2025 is 10.5 years, while in 2005 it was 8.2 years.
Because the average first-time buyer will have to save for a longer period of time, first-time buyers are finding other ways to effectively save outside of working their primary job for a deposit. According to NatWest, 33% of first-time buyers are taking on additional side work, while 57% are cutting back on lifestyle expenses. Further, 10% are moving back with relatives to minimise expenditure.
These affordability challenges reflect the survey conducted by the Building Societies Association, in which 62% of the respondents cite saving for a deposit as a significant barrier to purchasing a property. Even supposing that a first-time buyer has purchased a property, however, 65% of the respondents cite monthly mortgage payments as a major challenge.
For these reasons, while there is a desire for first-time buyers to purchase a property, evidenced by the cost-cutting measures taken in order to save for a deposit, market conditions often hinder rather than support an aspiring homebuyer.
Aaron Shinwell, chief lending officer at Nottingham Building Society, said: ‘Borrowers’ lives, incomes and household structures are more complex than ever, yet mortgage products have not always kept pace. Our research shows brokers are calling for practical innovation and regulatory reform so lenders can responsibly serve a broader set of customers’.
Proposed Remedies
The previous week saw ministers Matthew Pennycook and Lucy Rigby meet with a number of executives from Lloyds, Barclays, HSBC, Nationwide, and NatWest to discuss measures to facilitate first-time buyer activity. By addressing these issues, the Government is aiming to support up to 36,000 additional first-time buyers within a single year.
Proposals have already been drawn up to achieve this goal. Nationwide has announced plans to support 10,000 first-time buyers by lowering income thresholds under the Helping Hand mortgage scheme. For example, if a first-time buyer has an income of £30,000, the buyer can borrow up to £180,000 with the scheme as opposed to 135,000 without one.
Similarly, Lloyds Bank has pledged to launch the first Time Buyer Boost mortgage scheme, set to make available £4bn to lend to first-time buyers borrowing between 4.5 and 5.5 times their salary. Supposing that the average mortgage is £250,000, Lloyds Bank has said that it could help up to 16,000 first-time buyers.
Another bold scheme was opened by Newcastle Building Society called First Step, which offers the chance for first-time buyers to access a market scheme with a 2% deposit, the scale of the mortgage ranging between £96,000 and £350,000. Although the interest rate sits high at 5.25%, the scheme aims at undercutting the deposit hurdle that has constrained many first-time buyers.
Each of these schemes aims to achieve the goal of making mortgages more accessible and less demanding for a variety of financial circumstances. As Rigby pointed out, ‘That’s why I’m bringing lenders together to make mortgages more accessible and highlight new options for first-time buyers so more people can finally own their own home.”
Future of the First-Time Buyer Market
Given that these schemes have recently been rolled out, it remains to be seen whether they will be effective in enhancing accessibility for first-time buyers. Yet these are good first steps in tackling issues many first-time buyers have consistently identified, namely the high affordability challenges with respect to deposits and monthly payments.
Directly addressing these concerns will enhance market participation from first-time buyers. As Jatin Patel, head of retail banking at Barclays, observed: ‘From changing our affordability calculations, offering larger loans and lending to more people, to introducing novel mortgage products that reduce the need to save for a large deposit, supporting first-time buyers is a key focus to increase opportunities for home ownership and to unlock mortgage innovation.’
