The challenges faced by first-time buyers (FTBs) have been well-documented over the years. Issues around housing supply and demand have contributed to rising house prices and further led to struggles to raise an increasingly sizable deposit.

The high volume of consecutive interest rate rises by the Bank of England over the last 12 months, coupled with market uncertainty and affordability constraints have only served to exacerbate these challenges even further. Many FTBs increasingly find themselves unable to secure a mortgage in the current high-rate environment and yet the Chancellor’s Autumn Statement appeared to provide little respite.

Helping FTBs overcome these affordability hurdles must be a priority, particularly given the importance of this sector to both the UK housing and mortgage markets. Put simply, without FTBs, the housing market would be in a perilous state. Without someone to sell on to, second-time movers and existing homeowners would find themselves unable to climb the housing ladder and house prices would fall.

Supporting home ownership during interest rate rises
Over the years, there have been many products aimed at helping FTBs achieve their homeownership ambitions, from government-backed incentive schemes such as Right-to-Buy, Help-to-Buy and Shared Ownership, to higher loan-to-value (LTV) products requiring a lower deposit.

Some of these products have proven to be more popular than others, while some have simply been withdrawn or disappeared gradually over time. However, each one of these products highlights the ongoing desire to find flexible solutions to help FTBs get onto the property ladder – a sentiment that has never been more important than in the current economic climate.

Mansfield Building Society recently launched a new five-year fixed rate mortgage with a minimum deposit of just 5% in a bid to address the ongoing affordability challenges faced by borrowers in the current economic climate.

The product is available to home movers and FTBs and has been developed specifically to offer stability, which then allows affordability to be stressed at the pay rate, rather than 1% above our Standard Variable Rate (SVR).

With affordability stressed at the pay rate of the product rather than Mansfield’s SVR, it’s hoped the product will help FTBs overcome some of the affordability challenges they currently face whilst also providing certainty on payments for the next five years.

Maintaining a commitment to homeownership and the housing market
Although support for high LTV products has been sporadic over the years, the availability of these products in the current mortgage market is going to be crucial if the industry wants to support FTBs, and those facing affordability constraints, in their property ownership goals.

The challenges facing these borrowers have never been greater. For brokers dealing with FTBs or other clients facing affordability challenges, the need to have a broad range of product options in their toolkit can provide a real boost.

Providing brokers with versatile solutions to help navigate affordability barriers will not only help FTBs onto the property ladder, but it’s also helping the housing market in testing times.

Tom Denman-Molloy is intermediary sales manager at Mansfield Building Society