Following a far more encouraging end to 2023 across the housing and mortgage markets, the sentiment amongst our intermediary partners is that the opening weeks of 2024 have seen a steady rise in activity levels for both purchase and remortgage business across most sectors.
From our perspective, the year has also started well. Within this, there has been a constant stream of enquiries from a variety of first-time buyers who appear to be far more aware of the interest rate landscape, their own borrowing capabilities and their options.
Not that this is a market without its fair share of obstacles, as the recent analysis of UK Finance data from Yorkshire Building Society shows. This analysis highlighted that there were an estimated 290,000 first-time buyers in the housing market last year, making it the lowest number since 2013.
Although there was a decline in numbers, first-time buyers were still reported to have made up 54% of overall new house purchase activity in 2023, a slight rise from 53% the year before. This also represented a jump from the 41% share of first-time buyer activity in 2013.
When digging a little deeper into this evaluation, I can’t help but agree with Ben Merritt, director of mortgages at Yorkshire Building Society, who said that whilst it was encouraging to see that the share of first-time buyers was holding up, more could be done by the government and industry to support this particular borrowing cohort.
With the Budget just around the corner, it will be interesting to see if any schemes or initiatives are introduced with FTB’s squarely in mind. However, before we even attempt to second guess what might, or might not, be included in this critical political statement, let’s focus on an existing alternative which is certainly playing an increasingly prominent role within many of the FTB conversations we are currently having – shared ownership.
Shared ownership can still be classed as a specialist area of the purchase market due to some additional layers of complexity surrounding product availability, criteria and future proofing borrowing requirements. Meaning this is a product where advice is very much king and, in order to grow this market, there remains a need to generate wider consumer awareness and understanding on how shared ownership works in practice.
With this in mind, it was highly encouraging to see a recent announcement that a leading group of industry players have pledged to come together to provide a more transparent and consistent service offer for consumers in shared ownership schemes.
The Shared Ownership Council (SOC) is a cross-industry body committed to building a better shared ownership offer for consumers. The ambition of SOC is to build on the achievements of the shared ownership sector to date, to drive a better consumer experience of shared ownership and support the market growth of the tenure. As of 2023, shared ownership consumer satisfaction was reported to be at 56%, indicating the difficulties consumers face when exploring and entering this form of tenure.
A 56% consumer satisfaction rate represents an unacceptable level which underlines how vital it is that we – as a lending community, alongside our intermediary partners – ensure that borrowers have access a range of competitive options in a responsible, appropriate, fully transparent and well-informed manner. After all, shared ownership will not be the right choice for all borrowers but it can prove an appropriate choice for a growing number of homeowners in what remains a challenging time from an affordability standpoint.
David Lownds is head of products and marketing at Hanley Economic Building Society