Our recent poll has revealed that 84% agree that the cost-of-living has impacted purchasing a first property. Deposit and ability to afford mortgage payments act as major hurdles, with more than half willing to relocate to afford a home. At Nationwide, we offer a range of options and support to help people into their first home. And we are calling on the government to boost homeownership through a 'Housing White Paper', alongside the Building Societies Association.
Our research1 shows that around half (48%) of first time buyers say their prospects of owning a home are further away than ever due to the ongoing cost-of-living crisis. As a result, one in five (20%) don’t think they will be able to buy until at least their forties2 – a significant increase on the current average first time buyer age (33).3
The poll1 of over 1,000 aspiring homeowners – conducted to better understand the challenges they face – reveals that more than eight in ten (84%) say that the cost-of-living has impacted their plans4, with 49% having delayed them due to affordability concerns. Six in ten (60%) are postponing their homeownership plans by up to three years.
We're continuing to call for government to provide greater support to boost homeownership5 through an independent review into the first time buyer market, stamp duty reform and enabling more lending at high loan-to-income levels. We're also joining forces with the Building Societies Association and four of the UK’s largest building societies to produce a Housing White Paper this spring, outlining the solutions needed to tackle the homeownership crisis.
When asked about what the biggest barrier was to getting that first home, nearly a third (31%) said it was saving for a deposit. However, that isn’t the only barrier, with 44% pointing to an issue with affordability:
- One in five (20%) said it was finding somewhere in their price range
- 14% said it was being able to afford the monthly repayments
- One in ten (10%) said it was the ability to borrow enough for the mortgage
Rachael Sinclair, Nationwide’s Director of Mortgages and Financial Wellbeing, said: “Getting that first home is as challenging as it ever has been. We need to solve the first time buyer conundrum, which is why Nationwide has continually called for government to set up an independent review of the first time buyer market. It’s why we’ll also be jointly launching a Housing White Paper with the Building Societies Association next week, which will outline the essential policy changes that are needed to tackle the homeownership crisis and support people into their first home.
The deposit:
For those that are trying to save the deposit, more than a quarter (26%) of prospective homeowners have been saving for their deposit for three to five years, with a further 10% saving for six or more years.
However, over half of respondents6 (52%) now have less money each month to save for a deposit as a result of cost challenges, while 29% said financial pressures had impacted the amount of additional financial support, such as from parents.
According to the poll, the average amount people said they had to put towards the deposit was £9,533 – far short of the £22,400 needed for a 10% deposit based on the £223,554 average first time buyer house price, according to our House Price Index. While more than half (52%) had up to £5,000 available for a deposit, around one in four (26%) only had up to £1,000, while 11% said they had no money available to put towards a deposit.
Affordability:
Eight in ten (80%) are concerned7 about mortgage payments, especially at a time when mortgage rates have increased and other bills have risen.
The struggle to afford the monthly payments means many people are having to look at all the options when it comes to buying a first home, including who with and where. While more than half (57%) plan to buy with their partner or spouse, 12% will look to buy with a family member. According to the poll, 55% said they’d be willing to buy in another part of the country where house prices are cheaper, or where they could buy a bigger property, with 70% of respondents being prepared to move up to 50 miles away just to buy their first home.
Available support:
We have a range of solutions and resources to help your first time buyer clients into a home of their own. This includes a range of low deposit mortgages, the opportunity to borrow with Helping Hand, and £500 cashback. Our first time buyer hub also supports you with a range of guides and information.
Notes
1 The research was conducted by Censuswide with 1,008 prospective FTBs (those looking to buy in next five years) between 15.03.2024 - 19.03.2024. Censuswide abide by and employ members of the Market Research Society which is based on the ESOMAR principles and are members of The British Polling Council.
2 Includes those that answered “41-45” and “More than 45” to the question: At what age do you think you will be when you buy your first home?
3 Source: UK Finance
4 Includes those who answered “Strongly Agree” or “Somewhat agree” to the question: To what extent do you agree or disagree with the following statement: Cost-of-living has affected plans to buy my first home.
5 Support for borrowers:
Commission an independent review of the first time buyer market: a government-commissioned, independently-chaired review of the first time buyer market will identify the significant challenges facing the sector. It must address the gap between income growth and house-price growth, inadequate supply, the need for planning reforms and the impact of regulations on mortgage lending. A review would help the government produce a sustainable long-term strategy to support people hoping to purchase a property.
Stamp duty reform: stamp duty discourages people from moving. This has a negative impact on the economy with the UK losing out of all the spending associated with a house move as well as an inefficient use of housing stock preventing home moves to support people’s needs and changing circumstances. Stamp duty reform should remove any deterrent people currently experience when deciding to buy a new home. Reintroduce the Help to Buy ISA: given the success of the previous Help to Buy ISA, Nationwide wants the government to reintroduce it and increase the amount that can be saved per month from £200 to £500, reflective of higher house prices today and opening up more options for first time buyers. It would also like to see a proportionate increase in the redeemable bonus to match the rise in house prices. To date, Nationwide has opened over 542,000 Help to Buy ISAs.
Enable more lending at high loan to income levels: Nationwide’s Helping Hand proposition launched in 2021 has successfully tackled the affordability challenge by enabling first time buyers to borrow up to 5.5 times their salary on five and ten-year fixed rate mortgages to a maximum of 95% Loan-to-Value. However, current regulations mean mortgage lending at more than 4.5 times a borrowers’ income is restricted to 15% of a mortgage provider’s total lending. Increasing this cap will enable Nationwide to support even more first time buyers, particularly those who may already be paying more in rent each month than their mortgage payments would be.
6 This is based on the respondents who said they “Strongly Agree” or “Somewhat Agree” that cost-of-living has impacted their plans to buy their first home.
7 Covers respondents who answered “Significantly concerned” or “Somewhat concerned” to the question: How concerned or unconcerned are you about your potential mortgage payments given mortgage rates and other bills have increased?
8 Nationwide’s Helping Hand gives first time buyers the option of borrowing up to 5.5x income when taking one of the Society’s five or ten-year fixed rate mortgages. Helping Hand is available up to 95% LTV meaning those with just a 5% deposit can benefit.