First-time buyer mortgage applications have outpaced the wider housing market in the second quarter of 2025, with Yorkshire Building Society warning that the positive momentum may not be enough to offset longer-term affordability challenges.

New figures released by the mutual, based on CACI data, show that mortgage applications from first-time buyers rose by 12.4 % year-on-year between 31 March and 30 June.

A total of 131,682 applications were recorded, up from 117,126 during the same period in 2024.

By contrast, home mover applications increased by 8 % over the same timeframe, reaching 112,100 compared with 103,890 a year earlier.

FIRST QUARTER TREND CONTINUES

The Society said the data confirmed a continuation of the upward trend first seen in Q1 2025, when first-time buyer applications rose by 12% on the previous year – the strongest start to a year since the post-pandemic activity surge of 2022, and more than double the average annual first-quarter increase recorded since the introduction of Stamp Duty incentives in 2017.

Max Shepherd, group economist at Yorkshire Building Society, said that despite the “real setback” of the 1 April Stamp Duty changes, aspiring homeowners were demonstrating notable resilience.

“Although the house purchase tax changes which came into force on 1 April were a real setback, first-time buyers are proving extremely resilient,” he said.

“This is helped by a number of positive signs emerging which could help make things easier for them going forward, such as lower mortgage interest rates, growth in real earnings and a relaxing of affordability criteria by some lenders.”

BUYERS BENEFITTING?

According to Shepherd, market dynamics are beginning to tilt in favour of buyers, with the number of homes for sale rising faster than demand. “There are also signs of the emergence of a buyers’ market, where seller numbers are up 11 % year-to-date compared to a 3 % increase in people looking to purchase property,” he said.

“This could certainly help with the availability and cost of homes for first-time buyers.”

However, he warned that the outlook remained uncertain. “I’d still urge caution until we see how this trend plays out over the rest of the year. It’s important not to forget that first-time buyers have faced a number of challenges, such as high house prices, the cost-of-living crisis and the withdrawal of the Help to Buy scheme as well as Stamp Duty incentives.”

VOLATILITY REMAINS

Despite a more stable mortgage environment than in mid-2024, the Society said that volatility persists, driven by factors including stubborn inflation, renewed global tariffs under US President Donald Trump, and broader geopolitical instability.

Yorkshire Building Society continues to advocate for government support, arguing that the risk of homeownership slipping further out of reach remains significant.

Shepherd added: “It’s clear first-time buyers need more help not less if homeownership is going to remain a realistic possibility for them, which is why we’ve called, in our Home improvements policy paper, for incentives to be maintained.

“We wouldn’t rule out the need for further Government intervention to provide a new hand up for first-time buyers, just yet.”