Supporting the missing millions

The first-time buyer market remains one of the most critical, and increasingly complex, segments within the UK housing sector. A recent report from the Building Societies Association (BSA) has drawn renewed attention to the sheer scale of the challenge. Since 2006, 7.2 million individuals or couples were expected to step onto the property ladder, yet only 5 million have done so. That leaves an estimated 2.2 million “missing” first-time buyers who, despite strong aspirations, have been unable to transition from renting to homeownership.

This figure is more than a statistical blip, it’s a clear warning sign that parts of the homeownership journey are failing future generations. Supply remains a clear issue, while affordability continues to top the list of challenges facing first-time buyers. According to the BSA data, two-thirds (65%) of would-be buyers rank mortgage repayments as their biggest challenge, with 62% also citing the difficulty of raising a deposit. Repayments now account for around 22% of income for new first-time buyers, up from 18% in 2020, reflecting both the end of record-low mortgage rates and persistently high property prices.

For many, particularly younger buyers under 30, the problem is compounded by the cost of renting. Monthly rents often outstrip what would be required for a mortgage, yet these same tenants struggle to save the deposits needed to access homeownership. Even where 95% LTV mortgages are available, only a minority of private renters can afford to purchase, especially in higher-value regions where stamp duty and upfront costs are increasing once again.

Building societies have a long-standing commitment to supporting first-time buyers. As member-owned organisations, we have the flexibility to make lending decisions that prioritise people over profit. Our focus is not just on transactional volume but on enabling long-term, sustainable homeownership.

That ethos is reflected in our lending. In recent periods, mutuals accounted for nearly half of all residential mortgages to first-time buyers, a clear sign of the sector’s ongoing support. We also continue to lead in higher LTV lending, not only through traditional mortgages but also through innovative products like shared ownership structures, even self-build solutions, all of which provide alternative and accessible paths to ownership.

Beyond product innovation, the wider lending and policy environment must evolve to support the missing millions. There is a pressing need for a coordinated long-term housing strategy from government, one that addresses both the supply of suitable, affordable homes and the regulatory framework that governs mortgage lending.

More flexibility is needed to allow responsible lending that considers modern financial realities. For example, recognising rental payment history as part of affordability assessments or reviewing the current loan-to-income caps could open the door to more creditworthy borrowers in a measured and sustainable way.

The current environment, while challenging, does present an opportunity. Falling inflation, the potential for base rate cuts, and a growing appetite among first-time buyers to engage with the market all offer reasons for cautious optimism. But to truly unlock this potential, the industry must continue to push for accessibility, adaptability, and advice-driven lending. With education and the advice process playing such a central role in the first-time buyer journey, intermediaries are essential in helping clients explore and navigate options tailored to their specific financial circumstances.

As a building society, our mission is clear: to continue supporting first-time buyers not just with products, but with underwriting and criteria requirements which meet the shifting demands of modern borrowers. It’s through this mutual, people-first lens that we can begin to close the gap for the missing millions and help a new generation turn their homeownership ambitions into reality.