Keeping first-time buying simple

According to Savills research, the share of first-time buyers receiving help from relatives is at an 11-year high, with more than half of buyers now getting financial assistance from the Bank of Mum and Dad.

Purchases where family members offered financial help accounted for 57% of all first-time buyer transactions in 2023, the highest proportion since 2012, and the share of buyers seeking help was up 10% from the previous year.

Bank of England data shows that the estimated amount lent to first-time buyers by relatives in 2023 was a staggering £9.4bn, double what it was in 2019, and despite expectations that mortgage rates will continue to decline, this trend is predicted to keep pace through to 2026.

Frances McDonald, director of residential research at Savills, said that they expect lenders to continue to “favour less risky, lower-LTV mortgage lending,” which means that buyers will still find it difficult to get a foothold on the housing ladder.

It is hardly surprising that first-time buyers are taking a helping hand where they can. House prices have increased significantly since mum and dad stepped on the property ladder in the 1970s, and therefore so have deposits.

Figures from Zoopla indicate that across the UK, the average deposit for first-time buyers has risen from £16,000 in 2000 to £60,000 in 2024; this is a huge amount for first-time buyers, especially as wage growth has not kept pace.

Many would-be buyers still have the ambition to become homeowners but are trapped in a cycle of paying higher rents, with any disposable income they may have been able to save now being snatched away by the rising cost of living.

Necessity is the mother of invention and lenders do offer innovative mechanics for deposits to try and help. But with products that allow deposit support like gifted deposits, or even joint borrower sole proprietor, brokers need to be clued up when it comes to different lenders' criteria and the processes required to get it approved. This can sometimes make for a complex and lengthy process for the client.

At Vida, we believe that everyone should be able to purchase their own home without having to rely on financial support from family members, and we are passionate about helping to make that happen.

We want to support first-time buyers who have good affordability measures in place but are struggling to build up a deposit, and this is why we have created 3 & Easy, our new 97% loan-to-value mortgage.

With the 3 & Easy range, there is no compromise on loan size, and we also offer a term of up to 45 years to ease affordability pressures, particularly for younger borrowers who are just starting in their careers.

Clients can choose from five-year and seven-year fixed rates, with a fee saver option available. They will also benefit from access to Vida's flexible criteria, which covers adverse credit history, complex incomes and second job income, self-employed and contractors.

We consider it part of our responsibility to move the mortgage market into a place that makes home ownership possible for more people, and 3 & Easy is part of that approach.

Sources:

Savills : Savills UK | Bank of Mum and Dad to pay out almost £30 billion over the next three years

Zoopla : What income do you need to buy a home in 2024? - Zoopla