"Our research backs up several previous studies which conclude that far more people could reasonably afford to buy homes and comfortably service a mortgage than current regulations and attitude to risk allow"
- Kate Davies - IMLA
Around 3.5 million households who might have expected to purchase their first home since the 2008 financial crisis have yet to enter the property market, according to new research from the Intermediary Mortgage Lenders Association (IMLA). The report suggests these would-be buyers are being held back not by affordability but by barriers created through regulation.
Originally published in 2021, IMLA’s report The Mortgage Affordability Paradox examined the gap between low interest rates and stagnating first-time buyer (FTB) numbers. It estimated that 2.7 million prospective buyers had not made it onto the housing ladder despite favourable conditions. The updated 2025 edition of the report reveals that figure has now risen to 3.5 million.
Despite the higher rate environment following the Truss administration, IMLA noted that 330,000 FTBs bought homes in 2023, 15% above the 17-year average. The organisation argues this signals significant untapped demand among creditworthy borrowers.
“Our research backs up several previous studies which conclude that far more people could reasonably afford to buy homes and comfortably service a mortgage than current regulations and attitude to risk allow,” said Kate Davies, executive director of IMLA. “Clearly, more action is needed to help first-time buyers. In particular, the LTI flow limit restricting how many mortgages lenders can offer at higher loan-to-income levels is blocking many sensible borrowers from buying their first home.
“The government’s promise to reduce financial services red tape is welcome, and we await the outcome of the FCA’s Mortgage Rule Review with interest. But we also need to change the narrative, which tells aspiring first-time buyers that homes are unaffordable,” Davies continued.
IMLA highlights efforts by lenders to offer greater flexibility, such as extended loan terms, increased income multiples and higher loan-to-value (LTV) products. However, the group maintains that meaningful regulatory change is essential if progress is to be made.
“First-time buyers are the lifeblood of a healthy housing market, and homeownership confers a range of benefits on the population, from security to improved mental and physical wellbeing, not to mention enormous long-term financial benefits,” Davies explained.
An earlier IMLA study found that someone buying a home, initially with a 95% LTV mortgage, could be £352,000 better off over 30 years than someone who continues to rent privately.
“We need to focus on unlocking the huge pent-up demand illustrated by this report by making it easier for people to take that first step onto the property ladder, and broadcasting the message that, contrary to common perception, millions more can afford to buy their own home.”
