With such huge focus on improving FTB numbers, why isn’t their share of lending growing?

There is a lot of noise about first-time buyers at the moment, and that has clearly increased with the recent Labour Conference and the announcement of what effectively amounts to Help to Buy 2.0. More on that later.
This demographic clearly remains a political priority, and I can’t help but wonder if the latest figures on first-time buyer numbers have forced the government’s hand in this area.

Within the Financial Conduct Authority’s (FCA’s) latest Mortgage Lending and Administration Return statistics for Q2 2026, it shows the proportion of gross mortgage advances above 90% loan to value (LTV) reached 8.4% during the second quarter, the highest level since Q2 2008, while almost half of all advances – 47.5% – were above 75% LTV.

However, first-time buyers accounted for just 27.3% of gross advances during the quarter, slightly lower than in Q1 this year and their lowest share since the first quarter of 2024, which raises an important question about why greater availability of higher-LTV lending is not yet translating into first-time buyers taking a greater share of the market.
 

The purchase market increasingly needs first-time buyers

This matters beyond the fortunes of those individuals trying to buy their first home, because we have to consider where purchase transactions will come from in the years ahead.

Recent research suggests homeowners now move only once every 21 years – compared with around once every nine years during the 1980s – illustrating just how much the shape of the purchase market has changed, and if existing homeowners are moving far less frequently, then we will be looking to first-time buyers to carry more of the transaction load.

A first-time buyer also has an importance that extends beyond their own transaction, because they arrive without a property to sell and can provide the starting point for a chain of subsequent purchases, meaning getting one more first-time buyer into a home can potentially support several other transactions.

For an adviser community that has seen purchase business become harder to generate as people remain in their existing homes for longer, increasing the number of first-time buyers is therefore not some peripheral issue but an important part of supporting a healthier purchase market.
 

Mortgage access is already under review

Perhaps this is partly why we had the FCA’s recent CP26/18 Mortgage Rule Review consultation, which focused heavily on this very issue. A central part of that consultation was how the mortgage market might provide wider solutions for first-time buyers and other under-served potential borrowers, while maintaining appropriate affordability assessments and responsible lending standards.

The FCA has considered areas including irregular and variable income, previous credit difficulties, interest-only and part and part lending, and greater flexibility around how lenders assess certain borrowers, all of which recognises that a potential homeowner should not necessarily be excluded simply because their circumstances do not fit a traditional lending model.

This work comes at the same time as lenders are showing slightly more appetite at higher LTVs, so there is evidence of movement both in terms of the rules that govern mortgage access and the products actually available to borrowers.

Yet the latest FCA lending figures still tell us the share of lending first-time buyers account for is not increasing, and that may make all of us consider what else is required to turn greater mortgage availability into completed purchases.
 

A new scheme changes the conversation

Since I first considered these figures, we have of course had a significant development, with the government announcing its new Your First Home scheme, which is due to be confirmed in full at next month’s Budget.

The proposal is for eligible first-time buyers in England to be able to purchase a new-build property with a deposit of just 2.5%, supported by a government-backed equity loan of up to 20%, with an initial interest-free period and household income and local property price caps also forming part of the scheme.

Whatever your view of the merits of ‘Help to Buy 2.0’, there can be little doubt that this represents another sizeable intervention designed to get more first-time buyers into homeownership, and the deposit barrier it seeks to address is undoubtedly a very real one. However, I do wonder why such support should be limited to new-build purchases, particularly when the central objective is supposed to be helping more people buy their first home.

There is clearly another government objective here around stimulating new-build demand and supporting housing supply, and housebuilders were significant beneficiaries of the previous Help to Buy scheme, but if we believe first-time buyers need greater help to purchase, then there is surely a legitimate question about why that assistance should depend upon whether the property they want happens to be newly built.

Indeed, if first-time buyers are becoming increasingly important to the wider purchase market, then helping them buy existing properties could have an additional benefit by allowing existing owners to move and creating the chains of transactions I mentioned earlier.

That is not an argument against Your First Home, and we will need to see the full details at the Budget before reaching firm conclusions about how effectively it might work, but it does underline the extent to which government is now actively seeking ways to overcome the barriers faced by this group.
 

Advice should be part of the policy answer

This is one reason why we at Paradigm continue to passionately campaign for mandatory mortgage advice for first-time buyers, and why we believe advice should form part of the wider discussion about improving access to homeownership rather than being viewed solely through the lens of consumer protection.

Consumer protection is, of course, central to our campaign, because we continue to question whether someone purchasing their first property should be able to proceed through an execution-only mortgage process, but the arrival of another government-backed scheme only strengthens the wider argument for advice.

We are already dealing with a market that includes 95% and 100% LTV mortgages, family-assisted products, different affordability approaches and a growing range of options designed specifically for first-time buyers, and we will shortly be adding a government equity loan arrangement requiring consumers to understand not simply their mortgage but the implications of the government taking an equity stake in their property.

The more options we create, the stronger the argument becomes for ensuring first-time buyers understand those choices and receive professional advice about which, if any, is appropriate for their individual circumstances.

If the market is capable of providing more first-time buyer-focused lending, the FCA is considering how responsible mortgage access might be widened further, and government is now launching another major intervention to support first-time buyers, then professional advice should surely be viewed as the natural link between all stakeholders to help turn those opportunities into appropriate mortgage solutions and, ultimately, completed transactions.