First-time buyers are predicted to make up a higher proportion of the purchase market, with activity expected to grow, a report has found.
According to research from Yorkshire Building Society and business consultancy CACI, first-time buyers make up a higher proportion of the home purchase market than at any other time since the firm started measuring in 2016.
The report stated that Yorkshire Building Society’s overall mortgage applications have risen by around a quarter in 2024, going against UK Finance’s expectations that gross lending would fall in 2024.
Yorkshire Building Society’s analysis of CACI’s data indicated that the value of mortgage applications so far this year is 15% up on the same period last year, and first-time buyer applications have jumped by a third, the fastest growing group.
Analysis of CACI data also shows that activity among first-time buyers has jumped by a quarter in the past eight years, making up around 40% of mortgage applications in the market on average.
The report added that the proportion of mortgage applications by first-time buyers overtook homemovers for the first time in January.
Jeremy Duncombe, director of mortgage distribution at Yorkshire Building Society, said: “Things have changed substantially since UK Finance issued its forecasts last November. The picture is a fast-changing one, and despite continued inflationary pressures keeping interest rates higher than hoped, coupled with ongoing volatility caused by economic and political uncertainty, consumer confidence seems to be returning.
“While there is continued uncertainty and it’s therefore important to be cautious, the year has got off to a far better start than predicted, with housing market activity on the rise. House prices are predicted to settle and maybe even increase moderately throughout the rest of the year, with more stable mortgage rates resulting in more buyers deciding to dip their toes back in.”
He added: “The increase in first-time purchaser numbers could be attributed to a number of factors. We know from our own research that many are making life-changing decisions to prioritise homeownership over other milestones like starting a family.
“High rental costs are making the prospect of owning a property more appealing, and many may feel they’re just not prepared to put off buying any more in the hope rates might reduce.”
Rising rents fuelling first-time buyers’ drive for housing
The report found that average rates in the mortgage industry have decreased by 1.25% since their July 2023 peak of 6.5%, but have risen slightly recently.
Office for National Statistics (ONS) figures have also shown that average rents have jumped by 9% in the 12 months to February, which is the highest since data started being collected in 2015.
Duncombe continued: “When you consider figures like these, it’s not hard to understand why first-time buyers are increasingly aiming at homeownership despite the higher-interest-rate environment. Our own experience with our recent £5k Deposit Mortgage shows the strength of demand from first-time buyers to get on the housing ladder.
“While purchasing a home is clearly an emotive choice, it’s also a big financial commitment. Results from our Home Truths report, published last autumn, showed that, for over half of respondents, not wasting money on rent was the main driver for buying their own place.”
Anna is currently the deputy editor for Mortgage Solutions and editor for Specialist Lending Solutions. She has worked as a journalist since 2019, having secured her Gold Standard NCTJ diploma from News Associates in a fast-track six-month course.
She started her career as a report at specialist publication The Insurance Insider covering a wide range of areas before joining Mortgage Solutions and Specialist Lending Solutions in 2021.
In her role, she helps put together and structure the news agenda for the day and writes up press releases, reports, interviews, analyses and exclusives across both titles. She also commissions blogs for Specialist Lending Solutions and hosts online masterclasses and in-person events across the business.
She has been shortlisted for three journalism awards, which include BIBA Journalist and Media Awards Scoop of Year Award in 2020, Headline Money Mortgage Journalist of the Year Award (B2B) in 2022 and 2023.
Prior to being a journalist, Anna worked in ecommerce across Snow + Rock, Cycle Surgery and Runners Need websites, and before that worked at specialist financial PR firm Rostrum.
In her spare time, Anna enjoys reading, seeing live music, and cooking for friends and family. When she gets a chance, she also enjoys hiking, skiing and indoor rock climbing.
