First-time buyers are encountering substantial difficulties in the current mortgage market, as affordability constraints tighten and higher-rate deals persist, according to property professionals and financial analysts.
Mortgage Shelf-Life Lengthens
The average period a mortgage product remains available, known as its 'shelf life,' has extended to 16 days in early May, up from just eight days in early April, according to Moneyfacts. This doubling provides some relief for borrowers searching for deals, but the overall market remains challenging.
Shrinking Options for Small Deposits
The total number of mortgage products has decreased by approximately 10% since March, with higher loan-to-value (LTV) deals requiring a 10% deposit or less dropping by 14%. This disproportionately affects first-time buyers who often rely on smaller deposits.
Rachel Springall, finance expert at Moneyfacts, said: "First-time buyers will be frustrated to see the choice of higher LTV options drop by 14% since the start of March. Global pressures from the Middle East conflict disrupted inflation expectations and rate settings, prompting lenders to withdraw deals and increase fixed rates."
She added: "First-time buyers or those with just 5% equity seeking two or five-year fixed deals will find average rates remain above 6%. It is essential that new buyers feel supported, but affordability strains are evident. High interest rates, lack of affordable housing, and potential cost-of-living spikes all damage the mortgage market."
Affordability Influences Decisions
Mary-Lou Press, president of NAEA Propertymark, noted: "While the mortgage market has calmed slightly after recent volatility, first-time buyers still face significant pressure. Rates have eased marginally, but affordability remains stretched, especially for those with smaller deposits. Buyer demand is resilient, but affordability challenges clearly influence purchasing decisions. Many buyers are becoming more cautious, reassessing budgets, extending timelines, or looking at smaller properties and different locations to make home ownership achievable."
She emphasised the importance of professional mortgage advice as financial criteria and lender appetite continue to shift.
Longer-Term Deals as a Solution
Springall suggested that borrowers might consider longer-term mortgages, such as 35 or 40 years, to make initial payments more manageable. However, this results in higher overall interest, so making overpayments where possible is advisable to reduce debt and term.
