The ‘year of the first-time buyer’ tested by renewed rate volatility, but resilience remains

At the start of the year, many market analysts were heralding 2026 as ‘the year of the first-time buyer’. Revised lending criteria and relaxed regulation, innovative mortgage product development and the market expectation of two interest rate cuts was set to bring more first-time buyers into the market than in recent years. As the year progressed, renewed uncertainty in global markets contributed to a short-term change in interest-rate expectations, and those early hopes were somewhat tempered.

The UK mortgage market has experienced a period of volatility lasting several weeks and we are only starting to understand the underlying trends that emerged from this period.

Like all other lenders, we have had to respond to changing market conditions and revise rates on a number of products. As with any period of heightened volatility, the expectation is that pricing will stabilise as inflation and base-rate expectations become clearer.

First-time buyers, like anyone else looking to take out a mortgage, will feel the impact of this global situation. That said, we have confidence that resilience exists in the first-time buyer market that can help to mitigate this.

It’s also important to recognise the downside risks that first-time buyers face in this environment. Even a short-term increase in pricing can reduce borrowing capacity and push monthly repayments higher, making affordability assessments harder to pass and limiting choice. For many, higher living costs and the challenge of saving a deposit can be compounded by additional purchase expenses such as conveyancing, surveys and moving costs. A more volatile rate backdrop may also lead some buyers to feel pressure to act quickly, increasing the risk of overstretching budgets or having less headroom for future changes in household income or outgoings. More broadly, the continued demand for home ownership remains a significant feature of the UK market. Home ownership as an aspiration is an enduring consumer trend spanning multiple demographics and several decades. Throughout March, this has been evidenced by the trends we have seen in the mortgage market.

Against this backdrop of changing rate expectations, we have seen increased activity in the market, with some demand appearing to move earlier in the year.

Prospective homeowners, who might have been waiting for cuts to the base rate of interest later in the year, have decided to act now as they have observed the short-term spike in interest rates. For those consumers who entered 2026 with the expectation of buying their first home or moving up the property ladder, the current situation has convinced them to act now rather than take a ‘wait and see’ approach.

According to a number of industry data sources, the size of the active UK mortgage market in March increased significantly. As a major high street lender, we responded to this increase in activity and worked to meet the evolving demands of our customers. This suggests there is still demand in the market, and that first-time buyers may be an important part of that activity.  What we won’t know until later in the year is how this affects business in the second half of the year, but the initial signals we have observed suggest the market has shifted rather than stalled.

As a major lender committed to providing innovative routes to home ownership, we also recognise the value of the recent steps we have taken to support first-time buyers onto the property ladder. Just last November, we launched shared ownership mortgages, designed to help first-time buyers with smaller deposits to get on the property ladder through buying a share of a property (starting with a minimum share of 25%) and increasing the proportion they own as their financial situation improves.

This month, we also celebrate the first anniversary of the launch of our Family Backed Mortgage product. Launched last April, this product allows a prospective homeowner to boost their borrowing potential by adding a friend or family to the mortgage (often referred to as joint borrower, sole proprietor). In the last 12 months, over 2,000 customers have started their journey to home ownership via this product. We have seen parents help their children to get on the housing ladder, as well as many instances of friends and siblings assisting each other to work towards home ownership. We believe this product can continue to support first-time buyers in the months and years ahead. In total, we helped over 50,000 first-time buyers onto the property ladder in 2025 and are hopeful of at least matching the figure in 2026.

Overall, while the last few weeks have created challenging and volatile trading conditions, it is worth avoiding drawing firm conclusions from short-term movements. As markets adjust, clearer signals on inflation and the path of the base rate should help bring greater stability to mortgage pricing. We remain cautiously optimistic that the industry reaction to this macro-economic environment has been proportionate, and that 2026 can still represent an opportunity for customers who are looking to buy their first home this year.

NatWest shared ownership and Family Backed Mortgages - eligibility criteria and exclusions apply. 

Only for use by mortgage intermediaries.