Yet as a growing number of people reach that point, lenders will not be able to consider first-time buyers for mortgages up to 70% of the value of their property.
In August, the first-time buyer rate reached just over 17%, its lowest level in nearly 50 years. Mortgages on 50% or less of the property value have not been eligible for housing association loans since December 2016.
Loan-to-value caps were introduced by George Osborne, chancellor of the exchequer, in March 2016. But during the second half of 2017, affordability became a serious issue once again, with owners finding mortgage affordability laws did not prevent them defaulting in increasing numbers.
In November, a Bank of England report said: “The problems arising from the fast-growing number of buy-to-let properties and difficult credit conditions for homeowners are posing a significant threat to the sustainability of mortgage lending.”
The Lend It Better website compiled data from 60 providers in November, when one in three borrowers had a mortgage up to 80% of the value of their home. About 14% of those were on the more expensive 75% loan-to-value deals, offering greater prospects of rising repayments.
Laura Samuels, founder of Lend It Better, says: “From a borrower’s perspective, they need to start doing the maths. This is a substantial risk for any borrower with any mortgage, especially in this uncertain housing market.”
Many first-time buyers are limited by the length of their deposit, and prices being historically high, meaning it is difficult to find a home of a reasonable size. Samuels says: “Because affordability rules prevent many lenders from increasing interest rates, you may need to start thinking about how long you will need your mortgage to last.”