First Time Buyers turning to specialist lenders to get onto property ladder

A young couple just moved in

  • Vida Homeloans data shows over 40% of its residential purchase customers are first time buyers
  • New buyers are looking to specialist lenders for deals that cater to their needs and are not available from high-street lenders
  • Criteria driven lending means more FTBs are now able to get onto the property ladder 

New data from specialist mortgage lender, Vida Homeloans, reveals more and more first time buyers are taking advantage of greater product innovation in the mortgage market. A wider range of products and a raft of new lenders has meant that FTBs, who may have previously had limited choice from mainstream lenders, are now succeeding in getting their foot on the property ladder, often by using gifted deposits or buying with family and friends.

Statistics from Vida Homeloans show that since the company’s launch in October last year, a significant proportion (42%) of its residential purchase customers have been FTBs. This is in line with CML data showing that the number of FTBs over the last 12 months has overtaken the number of home movers for the first time since 2006[1].  The data from the lender also shows it has loaned FTBs an average £171,000 per purchaser, over £35,000 more than the average loan amount quoted by the CML.

This move towards FTBs exploring their options in the wider market and looking towards specialist lenders shows these types of purchasers are in need of the criteria-driven lending that new market entrants are increasingly providing.  A third of Vida’s applicants have used gifted deposits from close relatives and two-thirds have been part of a maximum of 4 borrowers getting together to buy a property. Over a third are self-employed and acceptable types of property such as flats above commercial premises are also an important consideration. Not all FTBs are maximising their LTV, with the majority borrowing below the 85% maximum.

For advisers, this is an important trend to be aware of when discussing mortgage lending with new buyers. Recent market changes and regulatory updates mean it is more important than ever for advisers to explore all possibilities when speaking with their clients, especially FTBs, who may be overwhelmed by the complexity of the market.  As such, advisers should be keeping abreast of the number and variety of new products available in order to ensure their clients are fully aware of the options open to them.

Louisa Sedgwick, Director of Sales, Mortgages, Vida Homeloans comments:

“The data we have gathered since last October shows that first-time buyers are taking advantage of the wide range of products and specialist options in the market currently, despite the near constant commentary suggesting buying your first home is becoming out of reach for some would-be FTBs. We have been amazed by the numbers of FTBs we have lent to already and we’re really proud to help them become homeowners.

“Whilst this is encouraging news for those buyers who are able to get onto the ladder, more needs to be done to promote the affordability of home ownership to those who have so far felt unable to purchase their first property. Brokers play a crucial role in ensuring first-time buyers pursue home ownership and don’t get deterred at the first step, which can often be a knock-back from high-street banks. Brokers need to be considering the wide range of products or features on offer, allowing these budding home owners to become real FTBs. As the mortgage lending market continues to evolve with greater product innovation, borrowers need to be aware they can take advantage of the various choices available to them and should be optimistic about purchasing their first house.”