Cheap loans and Help to Buy continue to support first-time buyer market

The government’s Help to Buy programme and low-deposit mortgages are helping to prop up the first-time buyer market, according to the latest data from specialist bank Aldermore.

Research by Aldermore for its first-time buyer index revealed nearly a third (29%) of prospective buyers believed getting onto the property ladder was difficult, while being able to access affordable housing was cited as the second largest challenge, cited by 23%.

But the chances of raising a deposit was regarded as less of an obstacle than last year.

While more than a quarter (28%) of those looking to buy their first home said gathering together enough money to pay for a deposit was the biggest hurdle they faced, this was significantly down on last year’s figure of 40%.

Assistance through low-deposit mortgages and saving schemes such as the Help to Buy ISA had boosted first-time buyers’ prospects.

Damian Thompson, Aldermore’s mortgages director, said it was “concerning” to see so many first time buyers finding the process of becoming a home owner “difficult and stressful, especially as by contrast they are overwhelmingly positive about actually becoming home owners”.

Help to Buy is due to end in 2023, although last year the then-chancellor of the exchequer, Philip Hammond, introduced limits on how it could be used, restricting it to first-time buyers.

Hammond also required regional caps that mean it can only be used for properties worth 1.5 times the value of the average first-time-buyer property in any given region.

Many housebuilders, ranging from large developers to smaller firms, have taken advantage of Help to Buy to shift newly-built homes.

Last year saw the annual value of Help to Buy loans break through the £3bn barrier for the first time since the scheme was rolled out in 2013.

Help to Buy loans worth £11.7bn have funded nearly 211,000 completions with a total market value of £54.5bn.