The number of people aged 18-30 securing a mortgage decreased by 13% in two years to just over 350,000, research shows.
According to a Freedom of Information (FOI) request sent to the Financial Conduct Authority (FCA) and analysed by Quilter, mortgages for this age group have been growing steadily for almost a decade, rising by almost 39% from 252,558 in 2014 to 350,092 in 2023.
However, since 2021, this number has been trending downwards, from a peak of 401,665 in 2021 to 350,092 last year.
Quilter said that heightened mortgage rates and house prices have “piled pressure on affordability”, so prospective first-time buyers were struggling to secure a mortgage.
The firm said that it was “imperative” that schemes introduced by the government should be “effective”.
The Labour government has pledged to introduce a Freedom to Buy mortgage guarantee scheme, which would see the current mortgage guarantee scheme made permanent.
However, the latest figures of the mortgage guarantee scheme show that, since it was launched, 44,368 mortgages have been completed through the scheme, with around 86% of these purchases being first-time buyers.
Quilter said that the scheme, while “well-meaning”, had had “very little impact”, so its permanence would “provide inadequate support to its intended beneficiaries”.
Help to Buy ISA, Help to Buy equity loan scheme and Lifetime ISA more effective
Quilter said that other schemes were more effective, pointing to the Help to Buy ISA, Help to Buy equity loan scheme and Lifetime ISA.
The Help to Buy ISA has supported 592,105 property completions since it was launched in 2015. While these can still be used to save for a first-time buyer property, people have until November 2029 to save into them and must have claimed the 25% government bonus by November 2030.
The Help to Buy equity loan scheme backed 387,195 property purchases in the decade it ran, but closed in 2022.
Quilter said that the scheme’s impact was “not uniformly positive”, as the design allowed the government to gain a share of the property’s appreciation, which put pressure on homeowners reaching the end of their five-year interest-free loan period.
The Lifetime ISA offering was launched in 2019 and gives a 25% government bonus on savings of up to £4,000 per tax year. It has been used for 171,050 house purchases, but the scheme has “punitive early withdrawal charges”, which could put off people using it.
Fall in young people securing mortgage due to ‘lack of support’
Charlotte Nixon, mortgage expert at Quilter, said that it was a “good thing” that more young people have been able to secure a mortgage over the past decade, but it “appears the number may now be falling”.
She added that was due to the “lack of support on offer for first-time buyers”, which has been exacerbated by high mortgage rates, the pace of house price growth and the difficulty faced when saving for a deposit.
“Given the current economic circumstances, young people’s finances are already incredibly stretched, so saving a deposit for a first home has been made all the more challenging. However, a high-loan-to-value [LTV] mortgage such as those that would be encouraged by Labour’s ‘Freedom to Buy’ scheme is simply not the answer.
“Such a scheme would not address the fundamental issue of high property prices relative to average incomes, which has been evidenced by the considerable lack of take-up thus far,” Nixon said.
She pointed to very few people making use of the scheme, and with house prices still fluctuating, those that do could be at risk of negative equity.
“Having such a low deposit amount would leave people with little to no wiggle room in terms of house price changes before falling into what can be an extremely difficult situation to get back out of.
“In the first instance, it will be imperative that Labour follows through on its commitment to increase housing supply, but even so this is unlikely to be enough to help those at the bottom of the chain. The dawn of a new government provides the perfect opportunity to reassess the options currently available, as well as to invest time into consulting and planning to ensure that any new schemes brought to the table are as effective as possible,” Nixon concluded.
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.
