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First Time Buyer Mortgages 2019: UK Consumer Research Report

  • ID: 4856167
  • Report
  • October 2019
  • Region: United Kingdom
  • 74 Pages
  • IRN Research
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  • Al Rayan Bank
  • Bank of Scotland
  • Co-operative Bank
  • Halifax
  • Lloyds
  • Post Office Mortgages
  • MORE

Research from the author’s First Time Buyer Mortgage Report 2019 indicates a large potential boost to Barclay’s first-time buyers (FTBs) market share. A much higher percentage of FTBs yet to make their first purchase favour Barclays compared with FTBs who made their first home purchase up to five years ago. At the same time, other providers like Halifax and Nationwide Building Society, the two market leaders among FTBs who have already purchased a home, could experience a decline in share. Barclays was one of the first mortgage providers to offer FTB mortgages linked to the incomes or savings of friends and relatives (Barclays Family Springboard mortgage). While other providers offer similar products, it may be that by being early into the market Barclays has stolen a march on its rivals.
The findings in this report are based on a survey developed by the author, with the interviews conducted by MIS Group. Interviews were conducted among 573 individuals who are, or will soon be, FTBs. The research was conducted in September 2019.

Some of the other findings from the report include:

  • There are three main pinch points along the typical FTB’s mortgage customer journey. These occur at the Go/No Go Stage of the process (essentially being granted a mortgage and accepting its terms), the pre-purchase mortgage research stage and the legal stage (e.g. finding all the legal and financial information required to be granted a mortgage and complete a home purchase).
  • FTBs are typically aged 32-33 when they enter the mortgage market and most recent FTBs are from the AB social grade.
  • The gender of home buyers has changed recently. Females seem to be growing in importance as FTBs and look set to make up a larger share of buyers over the next few years
  • Almost eight-in-ten FTBs who had purchased a home within the past year had used one of the Government help to purchase schemes, and a similar proportion of FTBs yet to make a purchase said they will also be using one of these schemes. However, around four-in-ten FTBs who have used a Government scheme to buy their first home said they did not need to use the scheme in order to complete the purchase.
  • Mortgage providers can improve their product offers by offering more part and part mortgages; offering mortgages on longer terms; stressing more the non-price elements of their mortgage offer; offering more mortgages linked to the incomes or savings of friends and relatives; introducing more age-related mortgages; and by co-operating with the government to introduce new FTB-focused products.

This report aims to give clients a crucial insight as to the current mindset of the typical first-time buyer (FTB), their approach to their first property purchase, and where this is directly impacting their wider spending potential. A key aspect of this report is considering the customer journey taken by recent FTBs and how this may differ from the journey likely to be taken by FTBs entering the market in the coming years. It also examines the market and identifies potential opportunities for relevant providers to grow their business and analyses how government-backed schemes to help FTBs have impacted the market. The report further explores what mortgages FTBs have or are considering buying, and where they have sought advice.

Note: Product cover images may vary from those shown
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  • Al Rayan Bank
  • Bank of Scotland
  • Co-operative Bank
  • Halifax
  • Lloyds
  • Post Office Mortgages
  • MORE

1. Executive Summary

  • FTBs are typically AB adults in their early 30s
  • FTBs are increasingly likely to be female
  • FTBs primarily buy jointly
  • FTBs become more creative when financing a deposit
  • And they increasingly use official help schemes even if they don’t need to
  • FTBs like to travel on their journey in the company of professionals
  • Five pinch points along the journey
  • But problems are not blamed on providers or brokers
  • And some problems arise because of the FTB’s own lack of understanding
  • Can technology improve the customer journey?
  • Use technology but don’t abandon bricks and mortar
  • Whether e-comms or human-comms, treat FTBs as individuals
  • Improving Product Choice
  • Don’t ignore your FTB customers after they have been with you for a while
  • Because customers you don’t talk to, won’t talk back
  • E-comms the growth preference
  • Most FTBs stop being FTBs within three years of their first purchase

2. Introduction

  • The six stages of the mortgage process
  • Methodology
  • Abbreviations

3. Background

  • FTBs enter the market typically in their early 30s
  • Most individuals who have not yet made their first purchase have yet to get to the final stages

4. Buying Your First Home: Easing The Financial Barriers

  • FTBs have to push LTVs to the max
  • Most FTBs devote around one-quarter of their income to repayments
  • The financial burden eases along with income
  • The financial burden is generally shared
  • FTBs mix and match sources of finance
  • FTBs use official help schemes but are these schemes targeting the right people?
  • Only four-in-ten scheme users needed the schemes to buy
  • Most help to purchase scheme users rate them highly
  • Help to Buy branded schemes the most popular

5. FTB Strategies: Getting Professional Help

  • Almost seven-in-ten like some professional support
  • Mortgage brokers and financial advisors the main professionals trusted
  • Selecting a strategy and selecting a source of information are both parts of the same process

6. The Mortgage Customer Journey: The Pinch Points

  • Difficulties seem more common early in the journey
  • Easy or hard, FTBs rate their providers highly
  • Front-end problems have slowed the process
  • Knowledge gaps
  • Engaging with the process helps build knowledge, up to a point
  • Lack of knowledge slows the process by causing more problems

7. Making It Easier For FTBS

  • Over 25% of consumers favour comparison sites for brokers
  • Around one-third of consumers, favour improved monitoring because it reduces communication strains
  • Some support for easing the documentation burden but some reluctance to accept digital solutions
  • Use technology but don’t abandon bricks and mortar
  • Personalised communications can improve the customer journey

8. Improving Product Choice

  • Growing demand for hybrid and interest-only mortgage types
  • FTBs start the buying process wanting conventional terms but end up with longer terms
  • It will always be about the money, but non-price competition plays a role
  • Barclays Family Springboard mortgage increasingly popular?
  • Product innovations

9. Being A Customer

  • Mortgage providers get less proactive as time passes
  • But things may have improved
  • Over one-third of FTBs initiate contact with their provider
  • FTB customers happy with the contact they initiated
  • FTBs increasingly like e-communications but still use the good old telephone
  • Over the next three years, most FTBs will cease being FTBs

List of Figures
Figure 1 Composition of the sample of FTBs
Figure 2 The key characteristics of FTBs
Figure 3 The FTB sample by stage of the home buying/mortgage taking process reached
Figure 4 The indicative equity position of FTBs
Figure 5 Indicative default/repayment risk by type of FTB
Figure 6 The repayment ratio of FTB household income
Figure 7 How the first home was/will be purchased
Figure 8 How FTBs saved for their deposit
Figure 9 The percentage of FTBs using a Government home purchasing scheme
Figure 10 The impact of the Government help to purchase schemes
Figure 11 The use of the help to purchase scheme
Figure 12 The preferred mortgage strategies of FTBs
Figure 13 The professional support preferred by FTBs
Figure 14 The most trusted information sources by a strategic approach
Figure 15 The stages or actions that proved difficult for FTBs
Figure 16 FTB rating of their mortgage providers and brokers
Figure 17 The time it takes for mortgage approvals and expectations
Figure 18 How much knowledge do consumers have of the mortgage process
Figure 19 FTB understanding of the mortgage process
Figure 20 FTB knowledge by the timing of the last mortgage and the problems encountered
Figure 21 The support for online comparison sites to aid mortgage broker selection
Figure 22 The support for online monitoring services and communications problems
Figure 23 Developments to make the mortgage process simpler
Figure 24 The preferred means of contacting a mortgage lender/intermediary
Figure 25 The communications problems that particularly annoy FTBs
Figure 26 The current and expected mortgages owned by FTBs
Figure 27 The mortgage terms accepted and expected by FTBs
Figure 28 The important factors influencing provider choice by type of FTB
Figure 29 Market shares of the leading mortgage brands among FTBS
Figure 30 Support for changed mortgage products
Figure 31 FTB contacts initiated by mortgage providers
Figure 32 Changes in FTB contacts initiated by mortgage providers
Figure 33 Recent FTBs initiating contact with their mortgage lender
Figure 34 The method of contact last used on customer-initiated contacts
Figure 35 The near future plans of FTBs

Note: Product cover images may vary from those shown
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4 of 4
  • Al Rayan Bank
  • Aldermore Bank
  • Bank of Ireland
  • Bank of Scotland
  • Barclays
  • Britannia Building Society
  • Clydesdale Bank
  • Co-operative Bank
  • Coventry Building Society
  • First Direct
  • Halifax
  • HSBC
  • Leeds Building Society
  • Lloyds
  • Metro Bank
  • Nationwide Building Society
  • NatWest
  • Nottingham Building Society
  • Post Office Mortgages
  • Royal Bank of Scotland
  • Santander
  • TSB
  • Virgin Money
  • West Bromwich Building Society
  • Yorkshire Bank
  • Yorkshire Building Society
Note: Product cover images may vary from those shown