Helping first-time buyers navigate homeownership

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First-time buyers face unprecedented challenges, but Skipton Building Society is innovating to make homeownership accessible. Their focus on broker collaboration, flexible products, and market insights is driving real change

LUCY LEWIS remembers well her first night in her first home. She was straight out of university and had bought the property with her now-husband, and as they sat on the living room floor eating Chinese takeaway straight from the box – they didn’t have a sofa yet – they couldn’t believe it was all theirs. “It’s a big steppingstone, especially when you’re young, with your whole life ahead of you. It’s a pivotal moment – who doesn’t remember it?” In that sense, not a lot has changed between then and now: a first home is still a monumental thing. But thinking back,

Lowering the ladder for first time buyers – rung by rung. Across the industry, options for FTBs can feel a little limited. We wanted to change that. That’s why we:

Overall affordability score in 2024

Outer London - South Inner London - East Outer London - East and North East

/100

“Fundamentally getting that first foot on the property ladder can be a struggle. But we’re keen to help people take that first step – first-time buyers were our focus this year and will remain so into the future”

Lucy Lewis, Skipton Building Society

Lewis also recalls combing through ads in the local paper and driving around to pick up people’s second-hand sofas and old dining sets, mindful of keeping costs down once they were homeowners, with all the expenses that entailed. For many first-time buyers today, managing homeownership is even more of a strain – but it’s a milestone that Skipton Building Society is intent on helping as many people as possible hit. “Fundamentally getting that first foot on the property ladder can be a struggle,” says Lewis, national accounts & first-time buyer lead at Skipton Building Society. “But we’re keen to help people take that first step – first-time buyers were our focus this year, and will remain so into the future.”

According to the Building Societies Association’s recent report, becoming a first-time buyer is possibly the most expensive it has been in the last 70 years. The two key issues are the cost of raising a deposit and the cost of running the home, factoring in things like mortgage payments, utility bills, and other bills amidst soaring interest rates and the overall rising cost of living. The cost of owning and living in a property is significantly more expensive than it used to be, and statistics bear this out. At its peak, the number of first-time buyers annually was around 600,000, and it's now closer to 300,000 a year – a substantially lower number. To help get to the root of the situation, Skipton Group mined its enormous reserves of data

and, coupled with Oxford Economics, recently released its Homes Affordability Index. “It provides a clear picture across the UK of a how difficult it can be to get on that property ladder,” Lewis says, adding there were “stark facts” in the index, including that only one in eight first-time buyers can afford to purchase the average first-time buyer home in their local area, with 80 percent reporting insufficient savings for deposit, and nearly four in ten renters spending 45 percent or more of their income on essential housing costs, compounding their inability to save toward a deposit. Lewis says the goal is to paint a clear picture for government and regulators on the challenge of housing affordability, but notes it’s important for mortgage brokers to be aware of these issues as well. A clear takeaway, she adds, is that if a broker is having conversations with someone who is that one in eight first-time buyer who can afford to purchase, now could very well be the time to do it. “Brokers very often have that conversation where clients want to know, is it the right time? Should I wait? Will rates go down? Will house prices go down? What's going to happen? These findings are great to show people to say, if you can do it, you should.”

The first change was to include people who had previously owned a home, but not in the past three years – those who had perhaps experienced a substantial life event like loss of income or a divorce – and are now renting. Most recently, the lender also increased the term of the product, up to 40 years from 35, and now accepts new-build flats and shared ownership. Skipton have also made some changes to affordability requirements. As well as Track Record, there’s also their Income Booster scheme, which allows up to three other people on the mortgage but not on the property deeds, to increase affordability. While family members typically step up, this product also allows for the support of those who aren’t blood relations, such as a godparent, friend, or colleagues. “Access to these products can make a big difference as well,” Lewis says, “and we’re seeing take-up increase.”

She adds that Skipton have recently introduced a product range exclusively for first-time buyers, some of which offer £1,500 cash back, which starts to address some of the issues highlighted in the index. Having these funds helps ease the burden of extra costs, such as furnishing your first home. “They can put it toward their first sofa, rather than having to buy a second-hand one,” Lewis laughs. These products are built to align with what has been Skipton Building Society’s driving purpose for the last 171 years: to help people into homes. It always circles back to that fundamental mission, and helping first-time buyers “fits completely with that,” Lewis says, adding that it’s also important to recognize wider fallout if these buyers are not

given the boost they need to reach the rungs of the property ladder. “It’s a knock-on effect: people who want to sell aren’t able to, because there’s nobody to buy, and then they can’t take their own next step in the market. It can affect the economy as well as consumer confidence.” It’s the broker’s bread and butter to find the right mortgage to meet a customer’s needs and circumstances, and they are vital to first-time buyers to help them understand the home-buying process and what to expect from the start. The mortgage aside, buying a property includes documentation and legal processes, all of which will be new. Once the mortgage is arranged and the offer received, there may be periods of time when the potential buyer doesn’t hear anything about the progress of the property purchase, so it can help to hear from a professional that this is normal and nothing to worry about. Looking at the big picture, Lewis is always rooting for the first-time buyer on a personal level. That’s because she wants more people to experience that same feeling she had years ago, of standing in their own home, knowing it’s all theirs. “When you own your own property, you have security, you can make it your own, and I think that’s important as well.”

Homing in on the main issues

Published October 14, 2024

“It’s a knock-on effect: People who want to sell aren’t able to, because there’s nobody to buy, and then they can’t take their own next step in the market. It can affect the economy as well as consumer confidence”

Lucy Lewis, Skipton Building Society

launched our FTB range – including £1,500 cash back on selected products* – up to 40-year mortgage terms, and more changed the game for those struggling with affordability with Income Booster (aka JBSP) introduced our low-to-no-deposit Track Record mortgage We’re here to support getting your clients the keys to their first home

*£125k min loan. Paid on completion. T&Cs apply. Available at the link above.

Great Britain

Least affordable regions

43 44 45

Highlands and Islands Eastern Scotland North Eastern Scotland

56 56 56

Most affordable regions

Buying affordability score for first-time buyers in 2024

West Midlands Outer London - South Herefordshire, Worcestershire and ...

16 16 17

Least affordable regions

Eastern Scotland North Eastern Scotland Highlands and Islands

37 35 33

Most affordable regions

/100

Great Britain

12% of people in this group can afford to take the first step onto the property ladder in Great Britain

Helping brokers help borrowers

Skipton has a broad range of products to help get first-time buyers into homes, including one that’s unique to the lender: the Track Record mortgage. Launched last year, it’s designed to help renters who want to get on the property ladder but are struggling to save up a deposit, also known as trapped renters. Appreciating that it’s difficult to save a hefty sum while paying all one’s usual bills, people who can show at least 12 consecutive months of on-time rent payments in the last 18 months could qualify for 100 percent LTV. Showing its willingness to adapt and innovate, the new product has already been tweaked to offer greater inclusivity. “Given its unique premise, we weren’t sure what the uptake would be,” Lewis says. “But we’ve seen a lot of interest, listened to broker feedback, and made amendments to it.”

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