The Intermediary – February 2026 - Flipbook - Page 46
RESIDENTIAL
Opinion
Momentum is
building, but the
job is far from done
A
er several years
in which first-time
buyers (FTBs) were
the most exposed
cohort in a higherrate environment,
2025 delivered a more encouraging
outcome. Transaction volumes
recovered strongly, with FTBs once
again accounting for a significant
share of purchase activity. According
to UK Finance figures, this share is
almost 20%, despite Bank Base Rate
(BBR) reductions arriving more slowly
than markets initially predicted.
Underwriting standards have
remained robust throughout, and
the recovery has been underpinned
by lender innovation and greater
regulatory clarity around
affordability. As a result, demand has
proved durable.
There are also reasons to believe
this momentum will continue into
2026. Further cuts from the Bank
of England are widely anticipated,
mortgage rates are already well below
their recent peaks and recent changes
to affordability rules are beginning to
feed through into lending decisions.
Together, these factors point to
gradually improving access to
mortgage finance for would-be FTBs.
However, stronger recent
performance should not be mistaken
for a full recovery. IMLA’s ‘Mortgage
Affordability Paradox’ research shows
that FTB numbers have consistently
fallen short of historical norms, even
during periods when affordability
appeared strong.
During the ultra-low interest rate
years from 2013 to 2022, mortgage
payments as a share of income were
close to record lows, yet FTB volumes
averaged around 330,000 a year –
well below the levels seen in earlier
decades. The result is a cumulative
44
The Intermediary | February 2026
shortfall of around 3.5 million
households who, based on past trends,
would have been expected to buy since
the financial crisis but have not.
The resilience seen in FTB
numbers in 2024 and 2025 reflects
this substantial pool of pent-up
demand rather than a resolution of
the underlying barriers to ownership.
Recent momentum is welcome, but
it has only begun to address a much
deeper deficit.
Sustained support
One consequence of this long-term
underperformance is the growing
number of households remaining in
the private rented sector (PRS) for
longer than planned.
Research by Barra Developments
suggests that a lack of understanding
has become the single biggest barrier
to ownership for Gen Zs. Nearly 30%
of aspiring buyers in this group said
that ignorance of the buying process
ranked higher than either saving for a
deposit or qualifying for a mortgage.
That finding is instructive, as it
implies that many renters are not
simply constrained by income or
access to products, but by uncertainty
about the mechanics of home buying.
While the research focuses on
process, it points to a broader issue
around confidence.
For many renters, mortgage
borrowing is still framed primarily as
risk rather than as a structured means
of investing in a long-term asset.
Repayments are viewed as exposure
rather than equity accumulation. This
perception can deter engagement even
where borrowing would be sustainable
and appropriate.
For an intermediary-led market,
this maers. Too many exclude
themselves from homeownership
based on outdated assumptions
KATE DAVIES
is executive director at the
Intermediary Mortgage Lenders
Association
about income multiples, deposit
requirements or what constitutes
‘acceptable’ affordability.
This is where the value of advice
extends beyond product selection.
Advisers play a critical role in
demystifying the home buying
process, reframing mortgage
borrowing in its proper long-term
context. Doing so is not about
encouraging unsuitable borrowing,
but about ensuring that households
are not deterred by misplaced fear.
The outlook for FTBs in 2026 is
more positive than it has been for
some time. But if the industry is
serious about addressing the shortfall
in homeownership, improved market
conditions alone will not be enough.
There remains a compelling case
for a targeted, time-limited successor
to Help to Buy to support FTBs and,
crucially, housing delivery. A more
tightly targeted version could support
access to homeownership while
aligning with wider policy goals on
supply and affordability.
Supporting FTBs is not just a
social good, it is a practical lever for
unlocking supply and sustaining
a functioning housing market.
Sustained progress will depend on
whether we collectively do more
to improve understanding, build
confidence and encourage engagement
with advice.
FTBs have already shown
that demand is there. The next
challenge is ensuring that lack of
understanding, rather than lack of
affordability, does not remain the
biggest barrier to turning that demand
into homeownership. ●
