Despite ongoing affordability challenges, the first-time buyer market remains a key driver of activity, but the profile of buyers is changing, with many entering the market later in life largely due to growing affordability challenges, along with personal preference. This shift presents both a challenge and an opportunity for mortgage advisers.
In this piece, Damon O’Connell, Director of Key Partnerships, explores how later life lending and the growing influence of the Bank of Family can help brokers engage clients earlier and expand their offering.
On the face of it the first-time buyer market in the UK is booming despite a host of challenges and accounts for around 40% of all sales. It is still regarded as the powerhouse of the housing market even though first-time buyers are getting older and older.
Addressing that issue would be good for society as a whole and also good for business for mortgage advisers in a market where acquiring new customers is highly competitive.
Increasingly at Key Partnerships, we are seeing interest in the use of later-life lending solutions by older homeowners to help their families onto the housing ladder through gifting. The Bank of Family is already a powerful force in the market, but wider awareness of later life lending options, both from a customer and mortgage adviser perspective, can add to its firepower.
First-time buyer challenges
Everyone is familiar with the challenges facing first-time buyers, including often the need for significant deposits and/or two incomes to meet affordability criteria. Recent data shows more than half (52%) need two incomes compared with around 40% a decade ago. More than half (54%) are signing up for 30-year-plus mortgages compared with around 45% a decade ago.
Since last April, the stamp duty threshold for first-time buyers has been cut from £425,000 to £300,000, with the effect that the amount of stamp duty paid by first-time buyers has quadrupled in a year to around £408 million, according to Rightmove.
Despite the challenges, borrowing by first-time buyers has hit record levels of nearly £83 billion in the year to October 2025 with 390,000 mortgages accepted, which was a rise of 30% on the previous year, according to Savills.
It’s a strong and growing market and clearly a competitive one for mortgage brokers, where being able to offer more solutions and support would be important to help win customers and grow their businesses.
One important aspect of the booming first-time buyer market is that first-time buyers are getting older – the average age currently is around 34 compared with 29 in the late 1990s. In the late 1990s around a quarter of first-time buyers were 25 or under compared with just one in 15 nowadays.
Helping to reduce the average age of first-time buyers should be a focus for the sector, given the benefits for individuals and society of earlier home ownership.
The Bank of Family and, increasingly, the use of later life lending options such as modern lifetime mortgages have a major role to play in this endeavour.
The later life lending solution
The Bank of Family is increasingly looking to gift to children or grandchildren who are first time buyers so that they can boost the deposits they have already saved and cut LTVs and therefore benefit from lower rates and more manageable monthly repayments.
Raising a deposit is challenging for many first-time buyers, and many will be quite rightly tempted by 98% or 95% LTV mortgages as they mean less time having to save and less rent being paid out. On average, equity release customers release around £123,000 in property wealth, some of which could certainly make a material difference to the size of deposit many first-time buyers can put down.
Our data shows nearly two out of three (63%) equity release customers use housing wealth across a range of purposes reflecting how modern lifetime mortgages are a multi-use product. Our experience tells us that many would be prepared to gift to family members and the amount of equity they have available would allow them to do so without impacting other objectives.
Understanding lifetime mortgages
Modern lifetime mortgages have become increasingly flexible and therefore are well positioned to deliver on those ambitions – they allow customers to pay interest in full or in part and allow capital repayments. Customers have the protection of security of tenure, which can be particularly important in giving confidence to gift, and a no negative equity guarantee, which means the estate can never owe more than the value of the property.
Many products have limited or no early repayment charges enabling customers to remortgage if rates come down in the future or if circumstances change.
Mainstream mortgage advisers who are not offering the option of later life lending to older homeowners, and not flagging the benefits of using Bank of Family to younger borrowers, are missing out on a range of opportunities and arguably not delivering good outcomes for customers.
Building a later-life lending business in-house is one potential route to go down, but it will need significant investment, will take time to implement and can divert energy and resources away from core existing revenue-driving activities. It is also a specialist area requiring compliance expertise.
In contrast, referral partnerships are low risk, quick to implement and provide a reliable and steady income stream of referral fees from customers that may not be suited to mainstream mortgage products. Advisers taking this approach are demonstrating a commitment to holistic advice and can evidence that they are meeting Consumer Duty obligations across all profiles of customers.
