Highly stressful mortgage process deterring over 40% of potential FTBs from buying a home

Two out of five aspiring first-time buyers say that they have been put off buying a home after seeing the difficulties others face, according to a new survey.

Related topics:  Finance,  Property,  FTB,  Mortgage
Property | Reporter
29th February 2024
FTB neg 1
"Seeing mortgage payments shoot up for millions of people because of how traditional mortgages work will of course put off many would-be homebuyers. We need to change this trajectory urgently"
- Arjan Verbeek - Perenna

New research from Perenna reveals that 62% of first-time buyers have faced difficulties securing a large enough mortgage to buy, making the dream of homeownership feel unattainable for many. London is hit hardest with 65% of first-time buyers affected and where property prices are 34% higher than the average property price in the UK.

Income-related difficulties are also prevalent, with 68% of first-time buyers experiencing challenges securing a mortgage due to their income level.

Mortgage income limits which restrict how much buyers can borrow – usually up to 4 or 4.5 times an individual’s income - pose an increasing homeownership barrier at a time when housing affordability is so low. The average house price in England is eight times more expensive than the average individual income.

The affordability crisis is forcing many first-time buyers to make major life milestone sacrifices to save up for a large enough deposit. 50% are delaying major life events such as marriage, starting a family, or changing their job to fulfil their dream of homeownership.

All of these struggles are causing many to feel put off buying a home. In fact, according to the research, the painful experience of securing a mortgage is deterring as many as two in five aspiring first-time buyers (42%) from pursuing homeownership.

One solution to solving this housing affordability issue is longer-term fixed-rate mortgages, like the ones Labour’s Rachel Reeves is backing, which are gaining popularity; 20% of respondents are opting for these types of mortgages (those with a fixed term over 10 years).

72% agree that if a mortgage provided them a home, without the risk of repayments shooting up, it would give them confidence in stepping onto the homeownership ladder - indicating a strong demand for greater stability and predictability in the home-buying process.

40% believe that mortgage lenders need to better support first-time buyers by allowing greater borrowing power and 48% agreed that if there was a mortgage that allowed them to borrow more to buy, they would find this attractive to consider.

Arjan Verbeek, CEO and co-founder of Perenna said: “It’s a travesty younger people are put off from one of the most rewarding experiences in life, becoming a homeowner. Seeing mortgage payments shoot up for millions of people because of how traditional mortgages work will of course put off many would-be homebuyers. We need to change this trajectory urgently.

"We believe everyone deserves a chance to own their home and enjoy living in it without worry. Longer-term fixed-rate mortgages are part of this solution, providing greater borrowing power, and stability through payments that don’t shoot up, a far cry from the way traditional high street mortgages work. Perenna’s goal is to make homeownership a reality for first-time buyers and make us a nation of happy homeowners.”

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