The Intermediary – July 2026 - Flipbook - Page 27
FIRST-TIME BUYERS
In focus
A big difference
for small deposits
T
he housing ladder
only really works
if first-time buyers
(FTBs) can access it.
However, improving
their prospects means
not only offering low deposit options,
but being open to those whose credit
records aren’t entirely perfect.
When looking at our data, it’s
clear how Near Prime skews towards
first-time buyers. In the second half
of last year, for example, aspiring
homeowners accounted for almost
three in five (59%) of our Near Prime
customers, compared with two in five
(41%) Prime applicants.
This likely isn’t unique to Atom
bank, either. Feedback from brokers
suggests they are spending more time
with first-time buyer Near Prime
clients too; our Near Prime Index
report found that in the first half of
last year, first-time buyers accounted
for 25% of brokers’ Near Prime clients,
but by the second half of last year that
proportion had increased to 30%.
In other words, brokers are not just
seeing an increase in demand for Near
Prime finance, but specifically more
demand from those hoping to take a
first-step onto the housing ladder.
Near Prime support
There are a few different factors
driving the link between Near Prime
and first-time buyers.
Education, for example, is a big
one. In compiling previous editions
of the Near Prime Index, brokers
have warned of the need to improve
young people’s understanding of how
borrowing works, and crucially the
lasting impact of missed payments.
Some have pointed to the greater
availability of ‘buy now, pay later’
services, which have made it easier for
would-be buyers to borrow, but also
potentially to accrue black marks on
their credit report.
If borrowers don’t truly grasp the
detrimental effects of missing the
odd Klarna payment here and there,
then they may have an unpleasant
surprise waiting for them when
they eventually want to take out
a mortgage.
But there’s also the issue of thin
credit files. Speaking with brokers,
it’s become ever clearer that a subset
of potential homeowners are falling
outside of Prime criteria not because
of their own previous payment issues,
but because there simply isn’t enough
information held on them by credit
agencies, an issue obviously more
likely to apply to those not yet on the
housing ladder.
Whether it’s a lack of payment
history, or the odd youthful mistake,
it seems that it is oen first-time
buyers who are most likely to find
themselves outside of Prime criteria,
and therefore reliant on lender
understanding in order to get onto
the ladder.
Small deposits
One of the biggest hurdles any
first-time buyer faces is building a
deposit. Saving up that deposit has
never been easy, but it’s goen a lot
harder in recent years thanks to the
combination of consistent house price
increases and persistent inflation,
eating into any potential wriggle room
in household budgets.
Lile wonder then that more than
half of first-time buyers are now
reliant on financial support from
loved ones in order to get onto the
ladder, according to Savills. But what
about those buyers who don’t have
access to the Bank of Mum and Dad?
For whom saving 5% is, in itself, an
enormous achievement?
Brokers have consistently
highlighted the need for higher LTV
options for Near Prime clients. In
direct response to this feedback, we’ve
steadily increased our maximum
LTV—raising it to 90% last year and
now to 95%. By ensuring there are
more low-deposit options for those
RICHARD HARRISON
is head of mortgages
at Atom bank
Near Prime is only
going to become more
important for the health
of the housing market”
with a light adverse history - or simply
very lile history at all - lenders can
open the door to homeownership for
borrowers who otherwise find their
options and ambitions limited.
Without those low deposit products,
Near Prime can never truly deliver for
those who need it most.
Opening up access
We know that Near Prime is here to
stay. The challenges of the last few
years have highlighted the clear need
for lenders to be able to look beyond
the black and white of a credit score,
and provide options for those with a
blip or two in their past.
But as an industry, we need to
recognise the fact that the link with
first-time buyers means Near Prime
lending is only going to become
more important for the health of the
housing market.
Without a decent level of choice for
Near Prime borrowers, we risk seeing
swathes of borrowers frozen out of
ownership altogether, particularly if
there aren’t sufficient options for those
with small deposits. ●
July 2026 | The Intermediary
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