Around one in eight first time buyers say they ‘fully understand’ the home buying process, while 29% said they felt ‘daunted’ by the legal process. Parents are the most trusted source of advice when purchasing a home, with more than a third (34%) of respondents saying they’d trust their mum and dad. That number increases to nearly half (46%) of those aged 18 to 24.
The research comes from a survey from Lloyds bank, highlighting the ‘critical knowledge gaps’ amongst first time buyers.
A survey of 2,000 prospective first time buyers identified the substantial deposits needed had prevented them from making an offer (22%), and one in five were worried about future job security and income stability. Getting a mortgage (22%) and finding the right property (12%) were also issues identified by the survey.
The bank says it has lent over £100bn to more than half a million first time buyers since 2018. It has also created a “Lend a Hand’ mortgage which offers the opportunity for a family member to place a 10% deposit into a Lloyds savings account as security against a mortgage. After three years the savings are returned, plus any interest, provided all the payments have been kept up to date.
Just one in 20 respondents said they felt confident about every stage of the process. 13% said they ‘fully understand’ the homebuying process. A further 32% understand most steps, while 42% said they know some of what’s involved.
Meanwhile research from fintech Armalytix suggests FTBs face growing pressures to get on the housing market, with half of all FTBs are taking out mortgages at 90% loan-to-value (LTV) or higher, with 1 in 7 stretching to 95%+ LTV now they are available. By contrast, only 22.6% of repeat buyers take on mortgages above 90%, highlighting a two-tier market where FTBs face the greatest risk.
Family contributions remain a key factor in FTBs’ ability to get on the property ladder with 25% of high-LTV first time buyers receiving a family gift, typically around £10,000. Despite such generosity, it’s often too small an amount to enable a better LTV rate with lender.
Despite initiatives to try and improve affordability for FTBs, Armaltyix’s research suggests only 32% of eligible FTBs used a government ISA this year. For most, family gifts, rather than government contributions, remain the defining factor in reducing borrowing.
“High LTV has become the new normal for first-time buyers” said Mike Ward, Chairman at Armalytix. “While government schemes like the Lifetime ISA or Help to Buy ISA certainly help, family gifts increasingly determine who can move forward and who remains stretched. Those with larger family backing move ahead, while others face higher costs and greater risk.”
Ward concluded
“Understanding the role of family support, government schemes, and borrowing risks is crucial for anyone advising or lending in this market
Although the overall number of first time buyers has fallen, as a proportion of total sales they make up a larger proportion of home buyers that 10-15 years ago accounting for over £106bn worth of property sales in 2024 according to the Office for National Statistics.
