Quilter uncovers 13% drop in young people securing mortgages since 2021

“While it’s certainly a good thing that more young people have been able to secure a mortgage over the past decade, it appears the number may now be falling.”
– Charlotte Nixon, Mortgage Expert at Quilter

Gathered and analysed by Quilter, a new Freedom of Information (FOI) request issued by the Financial Conduct Authority (FCA) has revealed the number of people aged 18-30 years old securing a mortgage each year has risen relatively steadily in the last decade, reaching 350,092 in 2023. However, this number has been trending downwards since a spike of 401,665 in 2021 which aligned with the stamp duty holiday introduced during the Pandemic.

Given mortgage rates and house prices are now dramatically higher than a decade ago, prospective first-time buyers are having a considerably tougher time securing a mortgage. The Government has announced new housing targets and planning reform but given the length of time it’ll take for this to impact the general population, Quilter believes MPs should explore alterative options to support first-time buyers in the meantime.

Labour has pledged to introduce a ‘Freedom to Buy’ mortgage guarantee scheme which would see the current mortgage guarantee scheme introduced by the Conservatives made permanent. Unfortunately, this scheme has had very little impact, so its permanence would provide inadequate support for its intended beneficiaries, according to Quilter.

Over the years, various mortgage assistance schemes have been offered to first-time buyers. However, many of these schemes are now closed or have time restrictions for when first-time buyers must use them in order to benefit fully. Quilter believes the Government should consider reinstating, adjusting, or taking inspiration from the ‘Help to Buy’ ISA, ‘Help to Buy’ equity loan scheme, and the Lifetime ISA.

“While it’s certainly a good thing that more young people have been able to secure a mortgage over the past decade, it appears the number may now be falling. This will in part be down to the lack of support on offer for first-time buyers, which has only been exacerbated by high mortgage rates, the pace of house price growth and the difficulty faced in saving a deposit,” explained Charlotte Nixon, Mortgage Expert at Quilter.

She said: “Given the current economic circumstances, young people’s finances are already incredibly stretched, so saving a deposit for a first home has been made all the more challenging. However, a high loan-to-value mortgage such as those that would be encouraged by Labour’s ‘Freedom to Buy’ scheme is simply not the answer. Such a scheme would not address the fundamental issue of high property prices relative to average incomes, which has been evidenced by the considerable lack of take-up thus far.

“Not only have very few people made use of the scheme currently on offer but with house prices still at risk of fluctuating, those that do could be at risk of negative equity. Having such a low deposit amount would leave people with little to no wiggle room in terms of house price changes before falling into what can be an extremely difficult situation to get back out of.

“In the first instance, it will be imperative that Labour follows through on its commitment to increase housing supply, but even so this is unlikely to be enough to help those at the bottom of the chain. The dawn of a new government provides the perfect opportunity to reassess the options currently available, as well as to invest time into consulting and planning to ensure that any new schemes brought to the table are as effective as possible,” she concluded.