First-time buyers could be the hardest hit by the mortgage market turmoil stemming from the conflict in the Middle East, as lenders pull deals and rates remain elevated. The average lifespan of a mortgage product on the market has significantly extended in early May, offering some respite to borrowers seeking new deals, according to financial information website Moneyfacts. However, prospective first-time buyers may still encounter difficulties securing favourable terms.
Market Volatility Continues
This improvement follows a period of heightened financial instability, largely attributed to the conflict in the Middle East, which saw numerous mortgage products withdrawn. While some deals have gradually reappeared, the market remains volatile. According to Moneyfacts, the typical mortgage product remained available for 16 days before being pulled at the start of May – a substantial increase from the average eight-day shelf-life recorded just a month prior in early April.
Despite this lengthening, the overall selection of mortgage products has diminished by approximately 10 per cent since March. Crucially, deals requiring a deposit of 10 per cent or less – vital for many first-time buyers – have seen an even sharper decline of 14 per cent, exacerbating challenges for those entering the property market.
Expert Insights
Rachel Springall, a finance expert at Moneyfacts, said: “First-time buyers will be frustrated to see the choice of higher loan-to-value (LTV) options drop by 14 per cent since the start of March. The global pressures caused by the conflict in the Middle East completely flipped the expected path of inflation and future rate setting, which caused lenders to pull deals and hike fixed rates.”
She added: “Thankfully, the calm of product churn during April compared to the upheaval in March resulted in the average shelf-life of a deal returning to a more realistic window, doubling from around a week to just over two weeks. First-time buyers or those with little equity of just 5 per cent hoping to grab a two or five-year fixed deal will find average fixed rates remain above 6 per cent.”
“It is essential that new buyers in particular feel supported, to keep the market moving, but affordability strains are evident. Higher interest rates, the lack of affordable housing and the potential for a spike in the cost of living can all damage the mortgage market.”
Ms Springall further noted: “The strain of high payments will make borrowers consider a longer-term deal, such as for 35 years or 40 years to make initial payments more manageable. However, this means paying more interest overall, so making overpayments where possible to reduce the debt and mortgage term is wise.”
Impact on Buyer Behaviour
Mary-Lou Press, president of NAEA (National Association of Estate Agents) Propertymark, said: “While the mortgage market has calmed slightly after recent volatility, first-time buyers are still facing significant pressure. Rates have eased marginally, but affordability remains stretched, particularly for those with smaller deposits.”
She added: “On the ground, buyer demand remains resilient, but affordability challenges are clearly influencing 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.”
“For borrowers navigating the current environment, taking professional mortgage advice remains crucial as financial criteria and lender appetite continue to shift.”
