Editor's note: This brief was summarised by The Property AI Newsroom from a report by Mortgage Strategy. Read the original article for full details.
Lender Innovation Targets First-Time Buyer Barriers Post-Help to Buy
First-time buyers have faced increased challenges entering the UK housing market since the withdrawal of the Help to Buy scheme, according to Accord Mortgages. Lenders are responding with new products aimed at addressing affordability and deposit hurdles.
Rachel Geddes of Mortgage Advice Bureau interviewed Jeremy Duncombe, managing director of Accord Mortgages, about the impact of recent market changes on first-time buyers. Duncombe stated that the end of Help to Buy coincided with rising living costs, the effects of the Truss mini-Budget, and higher mortgage rates. These factors have led to reduced borrowing capacity, higher deposit requirements, and fewer options for those looking to purchase their first home.
Duncombe highlighted Accord’s 5K Deposit Mortgage, which was created to help buyers who can afford mortgage payments but struggle to save a large deposit. He noted that this product aims to lower the deposit barrier, potentially allowing buyers to purchase homes sooner than they otherwise could. Duncombe also observed that other lenders are exploring similar innovations to support first-time buyers.
He emphasised the importance of restoring confidence among first-time buyers, noting that many potential buyers have excluded themselves from the market due to concerns about affordability, mortgage availability, or past credit issues. Duncombe suggested that the industry, including letting agents, has a role in communicating opportunities to renters who may not realise they are closer to homeownership than they think.
Duncombe also discussed the long-term benefits of homeownership, including security, flexibility, and the ability to build equity. He referenced research indicating a significant wealth gap in retirement between homeowners and renters, and stressed the importance of enabling people to access the housing ladder earlier in life.
For letting agents and inventory clerks, these developments may influence the flow of renters considering a move to homeownership, as well as the types of enquiries and support needed from those exploring their options in the current market.
Source: Mortgage Strategy