Legal & General – Mortgage Strategy

There has been a growth of older first-time buyers, increases in average loan sizes, and longer mortgage terms being searched for, the latest data from Legal & General Mortgage Services reveals. 

It found there was a 13% increase in 56 to 65-year-olds searching for their first property in Q1 2024 compared to the same period last year suggesting that a growing number of buyers are having to wait until their late 50s and beyond to take their first step onto the housing ladder.  

Legal & General’s data platform Ignite found in the 12 months to April 2024, 38% of potential buyers in the UK were first-time buyers (FTBs), with an average age of 33. 

When comparing Q1 2024 and Q4 2023, there was a 37% increase in 18 to 30-year-old FTBs searching for a property, and a 33% increase in 31 to 40-year-old FTBs.

It explains that there was a natural decline in overall market activity in the lead-up to Christmas, so these increases mark a return to activity in the spring months.

Elsewhere the data platform found that the average loan value searched for by advisers on behalf of FTBs over the last year was £217,125. 

When comparing Q1 2024 to Q1 2023, the average loan value searched for increased by 0.81% from £220,358 to £222,148. 

However, when comparing Q4 2023 to Q1 2024, the average loan value searched for by advisers increased by 3.7% from £214,299 to £222,148.

Legal & General says this highlights that buyer affordability could be starting to ease as average monthly earnings increase and inflation drops, meaning buyers can afford larger loan values.   

Meanwhile, the most common mortgage term searched for by advisers on behalf of FTBs was 31 to 35 years (36%), followed by 26 to 30 years (24%) and 36 to 40 years (17%).

When looking at the broader market, the most common mortgage term searched on the platform was 31 to 35 years (28.5%), followed by 26 to 30 years (22.4%) and 21 to 25 years (18.4%). 

Legal & General Mortgage Services managing director Kevin Roberts says: “Our figures show that the desire to own a home remains strong, even for those who are waiting longer to take those first steps onto the property ladder. As affordability begins to ease, we’ll likely see further activity in the first-time buyer market, especially if inflation continues to fall and the Bank of England reduces its base rate later in the year.”

“There are a number of factors likely to be impacting people’s decisions to buy a property. High rental prices may encourage some customers toward homeownership. Equally, as mortgage rates decreased at the start of the year, customers who had been waiting for the right time to buy may have found products which are more affordable.”

“While affordability has eased somewhat, we know the Bank of Family has still been playing a key role in the housing market, either by gifted deposits or via practical support to help family members who are trying to save for their first home.”

“This support from parents, grandparents, and other family members reached record levels in 2023, helping 318,400 property purchases with an astonishing £8.1 billion worth of lending. More than half (58%) of the value of intergenerational support goes to help first-time buyers.”

“However, if that housing ownership dream is going to be achieved we’d still recommend buyers seek out a professional mortgage adviser to give them the best guidance on their options. ”