The three A’s and pushing FTB boundaries

Sue Pedley

December 23, 2021

Sue Pedley is business development manager at Hanley Economic Building Society

In the past, I’m sure that I’ve referred to the three A’s – affordability, accessibility and availability – when it comes to the first-time buyer (FTB) market and I continue to do so as, year after year, these remain eminent.

Having said that, arguably the biggest barrier to homeownership is the ability to raise a significant enough deposit and expectations around the financial support required to do so were the main theme of a recent study by the Building Societies Association (BSA).

This found that 58% of would-be first-time buyers do not expect any financial assistance from their older relatives, but 71% of parents expect to provide some financial help to the younger generation.

49% of parents said they expect to leave a bequest when they die to the younger family members, but less than one in three first-time buyers (29%) are expecting it.

There was also a mis-match in expectations on giving and receiving a monetary gift towards buying a home, with 41% of parents expecting to do this, but only 24% of first-time buyers expecting it.

As outlined in the research, it’s clear that many families are willing to share their wealth and offer more financial help than the younger generation realises but how this is being communicated still leaves a lot to be desired.

The festive period may present a good opportunity to start such conversations, although I’m sure there will be better moments than others.

Harking back to that word desire, this is also prominent when it comes to homeownership aspirations despite the ending of the stamp duty holiday.

According to NAEA Propertymark’s November housing report, the number of prospective buyers registered per estate branch has grown by 12% between October and November to an average of 571.

This continues a trend of growing buyer interest, with the average number of house hunters per branch growing since June this year.

However, the supply of houses remains constrained, with supply 50% lower than November last year. This means there are around 29 buyers for every available property on the market, which is up 21% from October.

The demand and supply gap will help ensure that house prices remain robust throughout 2022 and as a lender who has always supported first-time buyers this is an area which we continue to monitor closely, in line with market trends and ever-changing borrowing requirements.

In 2021, first-time buyer activity, including shared ownership, accounted for 40% of all our new business lending and this helps underline our continued commitment to supporting aspiring first-time buyers onto the property ladder.

Looking forward, there are a number of government initiatives in the form of Help to Buy, the Mortgage Guarantee and the First Homes schemes which will generate additional borrowing solutions.

Shared ownership, higher LTV lending, intergenerational products and other lender-led incentives will also attract more potential buyers to the market.

Competition remains rife and even in the wake of the recent Bank of England interest rate rise, headline rates are tantalisingly low for short, medium and longer-term products.

Meaning that solutions are out there and with forward-thinking lenders constantly evolving their offerings and pushing risk boundaries in a responsible manner to secure their share of FTB business, even more choice will emerge in 2022.

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