01 July 2023

Helping first-time buyers in a challenging market

By Matt Kingston, The Nottingham Building Society

The process of getting onto the property ladder has never been easy, but it feels like first-time buyers in 2023 are facing more challenges than ever before.

The ongoing increases to the Bank of England base rate continues to force up mortgage rates and with inflation hitting record highs and a cost-of-living crisis, securing any mortgage can be a challenge ­– let alone one with an attractive interest rate.

In the current market, simply saving a suitable deposit can be daunting and many first-time buyers will need support to help them get on the property ladder. That support can come in several different forms, from Government schemes and gifts from family members to lenders’ criteria and the invaluable guidance of expert brokers.

In in 2022, 46% (170,000) of all mortgaged first-time buyers received family assistance with their deposit. And with the Government’s Help to Buy scheme ending in March, that number is likely to creep even higher in 2023.

At The Nottingham, we know how important that family support is, which is why we accept 100% gifted deposits from immediate family members. It’s just one of our criteria points that have been designed with first-time buyers in mind.

Our 95% products are fee free and, like all our residential mortgages, they qualify for one free basic valuation and a subsidised homebuyer report, helping to keep costs down.

We make our affordability assessment based on real-time bank statements, rather than ONS data and our 40-year maximum term that allows borrowing up to the age of 75, gives borrowers the flexibility to opt for lower monthly repayments.

Also, we’ve recently increased our maximum Loan to Income ratio (LTI) to 5.5x a borrower’s household income and for the self-employed, although we usually like to see three years of trading figures, we’ll only assess earnings from the last 12 months.

It’s a great start, but as a building society our members are at the heart of our business and we’re committed to ensuring that we do all we can to support all borrowers, but especially first-time buyers. We’re working hard to provide solutions and you’ll see a raft of criteria changes and new propositions come to market this year to support customers buying their first home.

The first of these changes are focussed on helping contractors secure a mortgage, you can read more about that on our website.

Matt Kingston

National Sales Manager

For adviser use only. Please note this content has been supplied by our lender partner and as such, is their responsibility. No party shall have any right of action against Legal & General in relation to the accuracy or completeness of the information in this article.