Buying your first home has always come with challenges, but in 2025, first-time buyers are facing an especially tough environment, and affordability remains one of the biggest hurdles facing many. Mortgage rates in the UK have moved from historic lows to postpandemic highs in a short space of time. And whilst interest rates are coming down, there are other challenges such as rising property prices and the cost of living. On the other hand, there are many areas where some myth-busting is very much needed. Particularly, within the first-time buyer market, many potential buyers assume they can’t afford to buy without exploring all options or talking to a mortgage adviser. I, for one, was one of those people. Back when I was at university, owning a home felt completely out of reach. With a thin credit file and no ‘bank of mum and dad’ to fall back on, I didn’t think getting on the property ladder was even an option. However, there are a few government schemes available, and lenders are becoming increasingly innovative in supporting first-time buyers. Seeking expert advice can make a real difference in navigating these options and getting onto the property ladder sooner. As an industry, we have an important role to play in educating and engaging clients early in their journey. By shifting perceptions and providing clear guidance, we can better support them in turning their homeownership dreams into reality. What are the main affordability barriers? High Property Prices The UK is facing a supply and demand imbalance in its housing sector, which is a big driver behind escalating property prices. House prices have outpaced wage growth in many areas, making it harder for buyers to afford deposits and monthly payments. As of early 2025, the data shows, there has been an annual price rise of 5.4%, which makes the average house price in the UK valued at £268k. High Interest Rates While rates have decreased from their peak in 2023, they remain elevated compared to pre-minibudget. Higher rates have led to increased monthly repayments, affecting affordability for many borrowers. Higher rates have also impacted the stress tests that lenders apply when assessing mortgage affordability. However, recent FCA guidelines on stress testing meant that many lenders, including Accord, have reduced the background stress tests and improved the affordability model. The following example illustrates how the new Accord’s affordability model can make a real difference for potential borrowers: Affordability uncovered: What’s holding First-Time Buyers back in 2025 and why early education and engagement are key. 10 MORTGAGE NEWSLETTER Angelika Christian Strategic Partnerships & Propositions Manager Accord Mortgages
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