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UK Mortgages 2011: First-time Buyers



The UK first-time buyer market has remained subdued over the last few years. First-time buyers generally represent the highest risk bracket and so lenders have shied away from offering them mortgages. However, recently there has been a return to higher loan-to-value products with lenders offering products that are aimed primarily at this market. Nonetheless, a recovery is likely to remain slow.

Features and benefits

• Profiles young mortgage holders to understand their attitudes towards mortgages.
• Considers the impact of regulation on the first-time buyer market.
• Analyses the current products available to first-time buyers.


The first-time buyer market remains subdued. The average age of a first-time buyer is now 29 although this rises to 36 for those who have not received any financial assistance. There were approximately 200,000 first-time buyers in 2010.

A plethora of new mortgage products aimed at first-time buyers have arrived in the last few months. However, many of the products are being offered by smaller providers and require support from parents or guardians.

Regulation could play an important role in the future of the first-time buyer market. The findings of the Independent Banking Commission and the DP11 consultation may raise costs for retail banks which could subsequently result in higher mortgage rates for consumers

Your key questions answered

• Gain an understanding of the profile of first-time buyers and their attitudes to debt.
• Keep up to date with what your competitors are doing within the first-time buyer space.
• Understand how the first-time buyer market will perform going forward and any opportunities that this presents.

Table of Contents

   First-time buyers remain a risky proposition for lenders but they provide some opportunities
      The first-time buyer market remains subdued and is continuing to struggle in the current environment
      A large proportion of 18-34 year olds require help with their deposit
      Older mortgage holders are more likely to pay the standard variable rate on their mortgage
      Consumers in the youngest age bands present the greatest repayment risk for financial institutions
      Nevertheless, there are opportunities for first-time buyers as mortgage affordability has reached a 12-year high
      There are regional discrepancies, with those in the north requiring a smaller deposit
      Market share discrepancies illustrate that some lenders are making more of an effort to target young buyers
   Lenders are introducing accounts to help first-time buyers, but they remain underserved
      Lenders are offering 95% mortgages but they are few and far between
      Lenders are offering borrowers the chance to increase their deposit with outside help
      Regulation is altering the landscape for first-time buyers
      A report by the Independent Commission on Banking may result in a small increase in mortgage rates
      The DP11 consultation is considering a more intrusive and pre-emptive approach
      The government' s new FirstBuy Direct scheme may further exacerbate the problem
      Tougher affordability requirements are likely to impede lending to first-time buyers
   The first-time buyer population will find conditions difficult over the next few years
      First-time buyers are likely to fall as a proportion of the overall mortgage market
      Growth in shared equity and shared ownership will be aided by innovation
      House price uncertainty will act as another impediment to the first-time buyer market
   Supplementary tables
      Equity release
      Loan-to-value (LTV)
   Further reading
   Ask the analyst
   Datamonitor consulting
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