• A third of first-time buyers think now is a good time to buy a home
• Less than one in five first-time buyers see Stamp Duty as a barrier to getting onto the property ladder
• More than half of first-time buyers think house prices will increase in the next 12 months

After two Bank Rate cuts in 2024, and with markets forecasting further cuts this year, first-time buyers are feeling more optimistic about becoming a homeowner than they were a year ago.

Despite the many challenges still facing aspiring homeowners, those who are planning to buy their first home this year are also more positive about the housing market than other UK adults.

The January Property Tracker Report from the Building Societies Association (BSA) reveals that more than half of aspiring homeowners (54%) think house prices will continue to rise in 2025. Regardless of this, a third (33%) of first-time buyers think now is a good time to buy a property, almost double the number a year ago (16% in Dec 2023). This compares to just one in five (20%) of all UK adults who think now is a good time to buy.

Barriers to buying a home

Surprisingly, the imminent changes in Stamp Duty, which will see all homebuyers including first-time buyers, paying more tax on properties bought after 6th April 2025, isn’t seen as a big hurdle to buying a new home. Around one in five (22%) people think Stamp Duty costs are an obstacle, but for first-time buyers this drops to 16%.

The report shows around two-thirds of people consider the biggest barriers to homeownership to be the affordability of monthly mortgage repayments and raising a deposit. Whilst these are also the main barriers for today’s aspiring first-time buyers, fewer cite these as obstacles compared to first-time buyers a year ago:

Mortgage Affordability

Whilst mortgage borrowers will be hoping for a cut to the Bank Rate today, after fewer cuts than anticipated last year, most homeowners are not worried about meeting their mortgage costs. Just 6% are concerned about maintaining their mortgage payments for the next six months, down from 12% a year ago (Dec 2023), and the lowest proportion since June 2022. Only 1% said they are not at all confident that they can keep up their repayments.

Commenting on the findings, Paul Broadhead, Head of Mortgage and Housing Policy at the Building Societies Association said:

“It’s encouraging to see that first-time buyers’ confidence in the housing market has grown significantly in the last 12 months.  Although there were fewer Bank Rate cuts last year than had been expected, the two reductions did mark a significant turning point in what has been a difficult three years.

“However, we know only too well that confidence in the housing market can be fragile and change quickly.  First-time buyers will be hoping the MPC make another cut to the Bank Rate today, to further ease their affordability pressures. But with political developments around the world and in the UK causing uncertainty in the financial markets, the Bank Rate cuts this year may again be fewer and potentially later than current forecasts.

“Despite their optimism, we know that first-time buyers face an unprecedented affordability issue and the BSA has repeated called for a long-term strategy that will increase the number of first-time buyers.

“The Financial Conduct Authority’s mortgage lending review, which we hope will consider the relative costs and benefits of stricter regulation versus the social benefits of homeownership, should help deliver greater mortgage innovation to meet the needs of prospective homebuyers. For example, allowing part repayment, part interest only lending, and the flexibility to shift between them, could improve affordability for many and be the difference between be able to get on the property ladder or not.

“Building societies have a proven track record of lending responsibly and supporting first-time buyers and want to do more. We are therefore very keen to work with the FCA to achieve this.”

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Press contacts

Tanya Jackson, tanya.jackson@bsa.org.uk Tel: 07881 501098
Katie Wise, katie.wise@bsa.org.uk Tel: 020 7520 5904
Lauryn Willis, lauryn.willis@bsa.org.uk Tel: 0207 520 5922
 
Notes to Editors:

The Building Societies Association (BSA) represents all 42 UK building societies, including both mutual-owned banks, as well as 7 of the largest credit unions.

Building societies have total assets of almost £525 billion and together with their subsidiaries, hold residential mortgages of over £395 billion, 24% of the total outstanding in the UK. They also hold £399 billion of retail deposits, accounting for 19% of all such deposits in the UK. Building societies account for 40% of all cash ISA balances.

With all of their headquarters outside London, building societies employ around 52,300 full and part-time staff.  In addition to digital services, they operate through approximately 1,300 branches, holding a 30% share of branches across the UK.