The value of the first-time buyer economy, comprised of lending and spending, is set to reach a total of £74.1 billion by 2025, according to latest research by Coventry for intermediaries in partnership with the Centre for Economics and Business Research (Cebr).

This research forms part of Coventry for intermediaries’ second edition of The First Time Buyer Economy report looking at the value that first-time buyers bring to the housing market and wider UK economy.

The report showed that mortgage lending to this segment of the market alone is predicted to reach £71 billion by 2025, which is 26% above estimated lending for the whole of 2023 (£56.5 billion). In 2024 this is set to increase by 16% to £65.3 billion.

Analysis by Cebr also shows that these borrowers are expected to spend an average annual total of £3.1 billion on extra costs relating to home purchase by 2025. The total contribution of aspiring homeowners to the housing market is therefore set to reach £74.1 billion in two years.

Findings from the 1,000 first time buyers surveyed across the UK show that they are currently spending an average of £3,400 on additional upfront costs including moving and legal fees, as well as surveyor, valuation and mortgage fees. This is £300 higher than the costs cited in last year’s survey and above inflation.

On top of this, it is estimated they will spend £4,900 individually on renovating and redecorating their home within 12 months of moving in, making the combined total spend on top of their mortgage over £8,000 (£8,300).

However, many novice buyers are still unaware of the upfront costs they need to budget for before applying for a mortgage. This was particularly apparent for younger respondents, as only 19% of those aged between 18-24 were aware of mortgage product fees.

With over a third (36%) of recent first-time buyers saying they needed more guidance and information on the additional costs of buying a house, mortgage brokers are in the perfect position to fill this advice gap by helping new buyers understand the costs of buying a home in this market, Coventry for intermediaries argues.

Jonathan Stinton, head of intermediary relationships at Coventry for intermediaries, said: “There’s no doubt that this year has been challenging for borrowers, with high mortgage rates, inflation and the ongoing cost of living crisis impacting people’s financial decisions. Despite this, new buyers still need and are keen to get onto the property ladder.

According to our report, first time buyers have accounted for almost a third of all UK property transactions over the last five years and are a huge contributor to the UK economy. As the mortgage market and economy stabilises in the next couple of years, we will see even more first time buyers ready to enter the market.

It’s clear that people taking their first step onto the property ladder need more guidance and support during the mortgage journey, particularly around the costs associated with buying a home. With many younger buyers still unaware of some of the fundamental costs involved in purchasing a home, brokers are essential and because of their experience are in the best position to provide this vital information to ensure first time buyers are fully prepared for this financial and personal milestone.”