First-time buyers face new challenges as family support shifts

New analysis by digital mortgage platform Tembo and lender Gen H highlights the growing affordability challenges for first-time buyers and the evolving role of family support in the housing market.

The latest Housing Purchase Affordability survey from the Office for National Statistics (ONS) reveals that the proportion of first-time buyers receiving financial support from family dropped from 45% in 2023 to 40% in 2024. Tembo’s own analysis estimates that this equates to a £500m decline in total parental gifts, from £7.5bn in 2023 to £6.9bn in 2024. However, around 131,000 first-time buyers still received cash gifts from family members to help fund their property purchases.

Despite the reduction in family gifting, first-time buyer numbers increased by 12% in 2024, reaching 330,000. The data also suggests a shift towards joint purchases, with 66% of first-time buyers purchasing with a partner or co-buyer, up from 61% the previous year.

A SHIFT TOWARDS ALTERNATIVE SUPPORT

As cash gifts decline, alternative methods of financial assistance have gained traction. One notable area of growth is the rise in Income Boost mortgages, (also known as Joint Borrower Sole Proprietor [JBSP] mortgages).

Gen H reports a 102% year-on-year rise in Income Boost mortgage applications from 2023 to 2024, while Skipton Building Society recorded a 31% increase in application values for these products over the same period.

Tembo and Gen H’s analysis over the past two years further illustrates the changing landscape of mortgage support:

45% of income boosters still have a mortgage on their own home, with an average property value of £475,000 and an outstanding mortgage of £123,000.
The profile of boosters is broadening, with the average home value of boosters falling from £547,000 in 2022 to £475,000 in 2024, indicating that support is coming from a wider range of families.
Booster household incomes have also declined, dropping from an average of £66,000 in 2022 to £57,000 in 2024.
Income Boost mortgages allow buyers to enter the market three years earlier on average, reducing the typical first-time buyer age from 34 to 31.
First-time buyers using these products still provide a deposit, with an average savings of £63,000. Mortgage affordability is then increased by an average of £64,000 (or 25%), with loan-to-income ratios averaging five times income.

Richard Dana, CEO and Founder of Tembo, said: “Family continues to be one of the most significant drivers for first-time buyers in the UK, but the form of support is changing. Cash gifts are still the biggest form of support, but for a growing number of families, Income Boosts are becoming more attractive. They don’t need to dig into savings and they can also support their children to get onto the property ladder without giving them an outright handout.”

LIMITED AVAILABILITY, BUT GROWING INTEREST

Income Boost mortgages remain a relatively niche product, with most boosters exiting the mortgage after five years once the buyer can afford repayments independently. Notably, the UK’s four largest mortgage lenders, which collectively account for over half of the mortgage market, do not currently offer JBSP products. Only two of the top 10 lenders provide these options.

However, availability is expanding. The number of lenders offering Income Boost products has nearly doubled over the past five years, with five new entrants in 2024, bringing the total to 30 providers in the UK. Looking ahead, Tembo forecasts continued growth of between 30% and 40% in 2025, with a similar trajectory expected in 2026.

Pete Dockar, chief commercial officer at Gen H, added: “Affordability is the biggest hurdle for aspiring homeowners today. This means the Bank of Mum and Dad is having to adapt: it’s now the Bank of Family, and simply helping out with the deposit is no longer enough.

“Our job is to help borrowers do this safely, simply and sustainably. This is where the income booster comes in – it helps the Bank of Family lend an affordability boost to support loved ones onto the property ladder. Demand has only grown for this type of mortgage product, and we believe these measures will increase further in the years to come as more people learn about this powerful option.”