Affordability in focus: Navigating challenges and unlocking opportunities
13 February 2025
2 minutes
Mortgage affordability has experienced many fluctuations over the years, driven by a wide-ranging set of economic shifts and market variables. These dynamics have widened the gap between two key aspects of affordability: getting onto the property ladder and managing current mortgage payments. This dichotomy underlines the complexity of today’s mortgage market and the crucial role intermediaries play in guiding clients through it.
Challenges in saving for a first home
For first-time buyers (FTBs), saving for a deposit remains a significant challenge. Many still rely on the Bank of Mum and Dad to make homeownership possible, with recent data from Barclays Property Insights showing that 57% of renters believe it would be impossible to buy a home without an inheritance or loan from a family member.
However, cautious optimism is emerging as renters adopt disciplined savings habits, with 35% of renters able to save independently for a deposit, and 17% saving with a friend or partner to share the cost. This trend is supported by the softening of house prices and impending stamp duty changes, motivating buyers and sellers alike to act quickly.
When identifying the three biggest barriers to homeownership, significant obstacles remain for renters. Two-fifths (40%) of respondents cited property prices, while 37% pointed to the amount needed for a deposit. Additionally, rising rents further hinder savings, making it increasingly difficult for many to enter the market.
Evolving trends among homeowners
The Insights data further outlined that rent and mortgage spending increased 1.8 per cent year-on-year in December, the lowest rate of growth since August 2024. Though encouraging, costs continue to increase, and consumers’ confidence in their ability to afford their rental and mortgage payments dropped to 52 per cent (down 3 percentage points), the lowest level in 2024.
Meanwhile, remortgaging activity has slowed as homeowners explore rate-switching options with their existing lenders. Extended mortgage terms are becoming more common, reflecting borrowers’ need for greater affordability. This trend is likely to persist, marking a long-term shift in borrower behaviour.
Supporting FTBs with innovative solutions
In this challenging environment, lenders and intermediaries have a unique opportunity to support FTBs through a range of innovative mortgage solutions with 29% of new homeowners having used first-time-buyer schemes to assist their purchases, highlighting the importance of alternative pathways to homeownership
For example, Joint Borrower Sole Proprietor (JBSP) mortgages, such as Barclays’ Mortgage Boost program, allow family members or friends to enhance a buyer’s affordability without being listed on the property title deeds.
With the Property Insights report stating that 22% of renters believe homeownership is achievable within five years, solutions like Mortgage Boost could make a significant difference. Applicants can use a family member’s income to increase borrowing capacity while maintaining sole ownership of the property. This approach is versatile, benefiting FTBs, home movers, and those remortgaging due to changes in circumstances.
The road ahead
Looking ahead to 2025, despite ongoing affordability challenges, the UK housing market continues to demonstrate its resilience. Activity levels remain robust, with one in six existing homeowners (16%) intending to relocate this year and one in 10 (9%) now considering previously unaffordable properties in more desirable areas to be within their price range. Topping the list of priorities among prospective buyers are garages or driveways (40%), gardens (39%), and functional spaces (32%), such as pantries or utility rooms
For intermediaries, these trends highlight the importance of staying informed, leveraging innovative solutions like Mortgage Boost, and maintaining strong relationships with lenders. By providing tailored support, intermediaries can help more clients achieve their homeownership dreams and contribute to a vibrant and sustainable property market in 2025 and beyond.