The Growth Series

Attracting first-time buyers

First-time buyers make up a significant proportion of all home sales each year. But tapping into that market isn’t always easy. This is especially true during difficult times when buyer needs and wants are rapidly changing. 

Knowing and understanding your target audience is key to success and it’s no different with first-time buyers. To really get in touch with them, you need to understand what it is they are looking for, what challenges and barriers to entry they are facing, and exactly what it is you can do to help.

What first-time buyers are looking for

Recent studies have shown that current first-time buyers aren’t looking for their forever dream home anymore. Instead, they view property as an investment and getting on the housing ladder as the best way to get ahead financially. 

The pandemic has impacted this further and significantly shifted what first-time buyers are looking for in this market. Although many have found themselves furloughed or out of work, those who have remained in full-time employment have had greater opportunity for saving and an increased resolve to own a home. 

So just what are today's first-time buyers looking for? The desirability of London (and cities in general) has diminished and a great deal of them are searching further afield. Research has shown that they are looking for more opportunities and space outside of the city. Gardens and outdoor areas have proven to be the top priority, quickly followed by size and room for a home office.

Challenges and barriers for first-time buyers

In today’s market, first-time buyers are facing different challenges than previously. That said, the two major barriers to purchase are still deposits and affordability. 

Since Covid-19 and the first lockdown, many mortgages have required higher deposits, though Help-to-Buy can be a good scheme for assisting first-time buyers with a low deposit. Current first-time buyers have been finding a wide range of methods for pulling together deposits. 

Read more: Help-to-Buy Guide

In addition to some having a greater opportunity to save during the pandemic, others have been turning to family and friends for support. The ‘Bank of Mum & Dad’ is ranked as one of the top 10 lenders for a deposit. An alternative option that is also being utilised is shared ownership, which can be beneficial both in terms of deposit and affordability. Meanwhile, crowd-funded deposits have recently seen an upswing in popularity.

Affordability is a more difficult challenge for first-time buyers to overcome. Regulatory stress testing requirements, though important, can impact the ability for some to find a mortgage. A proportion of these potential buyers are paying higher rent than a mortgage would be, but they are unable to obtain lending due to stress tests. Joint borrower sole proprietor mortgages could help support those with affordability challenges.

Learn more: Podcast #58 Predictions for 2021 with UK Finance and IMLA (part two)

How brokers can appeal to first-time buyers

Knowing the needs of first-time buyers is key to attracting them as clients. These buyers have different concerns and challenges compared to other buyers or remortgagers. Creating content and showcasing your understanding is imperative. 

Highlighting the value of advice by demonstrating the areas in which a broker can help is a must. For example, brokers are aware of the full range of potential solutions, whereas consumers often don’t have the full view of possibilities. 

Additionally, providing content that helps first-time buyers get ‘mortgage ready’ can be invaluable. When putting this content together, consider the following:

  • Steps to improve credit score
  • Different deposit options
  • Explaining the mortgage journey
  • Identifying vulnerable buyers and exploring how brokers can help
  • Enable family to be involved in discussions for support
  • Showcase other ways you can assist with the process (eg. with solicitors, conveyancers, insurance or protection)
  • Remind buyers that you can support them throughout their mortgage lifetime, not just this first purchase

It’s also important to consider how much personal contact first-time buyers are looking for compared to automated services.

Using this information, you can begin to better understand and attract first-time buyers. Keep in mind the challenges they face, what they’re looking for in a home, and what you can do as a broker to help and support them.

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