New research shows many aspiring first time buyers are ruling themselves out before exploring what is possible, when many may be able to buy sooner than they thought.
According to research carried out by the Building Societies Association (BSA), almost half (47%) of people surveyed who said they want to buy their own home have never spoken to a lender or mortgage broker to check what options are available to them. Even among those who have, around half (46%) have not done so in the last year.
When participants were shown options available from building societies that require no or low deposits, two thirds (67%) of the 1000 people surveyed said they would be able to buy a home sooner than they thought, highlighting a clear gap between perception and reality.
“Too many aspiring first time buyers assume homeownership is off the table without ever checking what is actually available to them,” Paul Broadhead, head of mortgages and housing policy at the BSA, said.
“This research shows that’s a mistake! When people explore the kinds of mortgages building societies offer, many realise they could buy sooner than they thought”.
Options those surveyed hadn’t considered include very low or no deposit loans, extended and flexible repayment terms and shared ownership mortgages. “Building societies have been helping people into their first homes for more than 250 years and that hasn’t changed,” said Broadhead.
“We’re still innovating, still flexible and still focused on real people and the challenges they face”.
The research also showed that more than half (59%) of today’s first time buyers have less than £10,000 in savings. On average, they think it will take around six and a half years until they are in a position to buy their first home, with a third (32%) believing they will never achieve homeownership. The biggest challenges are financial, with affordability (64%) and saving a deposit (53%), cited as the main blockers.
Lack of knowledge was also revealed by the survey, with half (48%) wanting to better understand the products available, and the amount of deposit they need (44%). One in three (29%) said they were unsure who to speak to first or how to improve their credit score.
Mortgage professionals were seen as the most trusted source of advice. More than half of those surveyed (53%) said that a mortgage adviser is the best source of information, followed by financial providers (43%).
Broadbent noted:
“A simple conversation with a building society or mortgage broker could open doors that you may not realise were there.”
Building societies provide 35% of all first-time buyer lending, with nearly half (46%) to borrowers under 30. Almost a quarter (23%) is leant to those with a deposit of less than 5% of the property price, with 10% to first-time buyers aged over 45.
“Too many people are giving up on owning a home before they’ve even spoken to a lender – believing that getting the keys to their own place is out of reach”, economic secretary to the Treasury Lucy Rigby KC MP said.
“…now that there are more attractive and flexible products on the market, it’s right that people are encouraged to have another look to see if there might be an option which works for them.”
