Buying your first home in todays market isn’t easy, but it’s far from impossible. While only 10.4% of renters aged 20-44 are currently in a financial position to buy, and average deposits now exceed £61,000, first-time buyers still make up more than half mortgage purchases in the UK. Strong demand and lender flexibility mean that getting on the ladder is still achievable with the right research and advice.
Most major lenders are keeping mortgage rates steady ahead of the Bank of England’s next interest rate decision this Thursday. The average rate for a two-year fixed mortgage stands at 4.89%, while five-year fixed deals average 5.14%. Still higher than the lows seen a few years ago, but they’ve eased from last year’s peaks, making it a good time for first-time buyers to compare deals and lock in the most competitive option available.
The Mortgage Guarantee Scheme, which has enabled more than 53,000 buyers to purchase homes with just a 5% deposit since 2021, is due to end on 30th June. However, Chancellor Rachel Reeves announced in Labour’s latest Spending Review a new, permanent version of the scheme launching in July with continued support for lenders offering 95% loan-to-value mortgages.
Stamp Duty changes introduced in April 2025 reduced the exemption threshold for first-time buyers from £425,000 to £300,000. This increases upfront costs for those buying homes between £300,000 and £500,000, especially in regions like London and the South East, where average first-time buyer prices exceed £450,000.
5 tips for buying your first home:
1) Maximise your deposit strategy
Use a Lifetime ISA to save up to £4,000 annually with a 25% government bonus. For buyers struggling to save a full deposit, Shared Ownership schemes allow you to purchase a share of a property and rent the rest.
2) Choose the right mortgage for you
Fixed-rate deals provide payment certainty in a flat or rising rate environment. Variable deals may offer lower initial costs but expose you to rate changes tied to the Bank of England base rate and could increase over time.
3) Use mortgage brokers for access and speed
Brokers can access deals not available directly and provide tailored advice based on your credit profile, deposit, and employment – particularly valuable in a competitive lending market.
4) Account for the new stamp duty rules
If you’re buying above £300,000, calculate your new liability and adjust your search budget accordingly. The updated thresholds introduced in April 2025 have increased upfront costs for many first-time buyers, especially in higher-priced regions, so it’s important to factor this into your affordability checks early on.
5) Future-proof repayments
Choose a mortgage that allows overpayments without penalties as this lets you reduce your loan balance faster if your finances improve. When your fixed term is nearing its end, start looking at re-mortgage options early. With rates expected to ease later this year, switching at the right time could save you money.
Affordability remains a challenge, but demand from first-time buyers is stronger than it’s been in years. Lenders are continuing to support low-deposit options, and new government backing is on the way. And if you’re looking to buy your first home, congratulations – it’s no doubt an exciting time for you. Stay ahead with the latest market updates to make your home buying journey as smooth as possible.
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