• A third (34%) have pinned their hopes on Labour as the party they most trust to support first-time buyers, while only 8% believe the Conservatives have their back
  • In the last six months, two-thirds of aspiring first-time buyers have had to adjust their home-buying goals, with more than half now planning to buy later than hoped
  • Two-thirds (62%) believe owning a home is the key to unlocking financial security
  • Saving and investing app Moneybox surveyed 1,000 aspiring first-time buyers

June 27, 2024: The incoming UK government has a social mandate to support the next generation of homeowners in the UK, says Moneybox. The saving and investing app’s latest research found two-thirds (66%) of aspiring first-time buyers (FTBs) have reevaluated their homeownership goals in the past six months, with half (51%) now planning to buy at a later date. 

In its latest biannual study of 1,000 aspiring home-owners across the UK, Moneybox found that a third (34%) think Labour is the party best placed to support FTBs as they navigate some of the most challenging home-buying conditions in 70 years. More than a quarter (28%) of respondents admitted they don’t trust any political party to help them purchase a home of their own, and only 8% believe the Conservatives have their back. The Liberal Democrats and Green Party saw only 4% and 3% FTB support respectively.

According to the study, the average FTB has been saving for 2 years 10 months and expects to be able to buy their first home in 4 years and 6 months, an increase from 4 years and 2 months in 2023. 

Despite a generally improving economic environment, FTB confidence has wavered in the face of persistent cost of living challenges and market volatility. 41% now admit they are feeling pessimistic about their chances of becoming a homeowner, increasing from 37% a year ago and 21% in 2022.

Over half (57%) said this is because the cost of living has eroded their disposable income, making it harder to save a deposit – a sentiment that has remained relatively constant for two years. 51% are disheartened because of rising house prices and 37% are concerned that high interest rates have made mortgages more unaffordable.

Others have maintained a more positive outlook, with 35% reporting they continue to feel optimistic about their home buying plans.  One in five (21%) are confident they will get on the housing ladder despite the ever-changing environment.

The most notable drivers of their optimism include the belief that interest rates will start to come down this summer (26%), the cost of living crisis is slowing down, and anticipation of support measures an incoming government may introduce following the general election (18%).

However, unavoidable financial pressures have meant that FTBs are now saving 18% less towards their first home deposit than a year ago, down from £344 to £286 a month, and a quarter (26%) have had to dip into their hard-earned deposit savings to cover unexpected expenses.

Enabling the next generation of homeowners

Despite these challenges, owning a home is more important than ever for 79% of FTBs. Two-thirds (62%) believe being a homeowner is vital to achieving financial security. 55% are primarily motivated to buy to escape the increasingly expensive rental market, up from 48% in 2023.

To make their dream a reality, cash savings have remained the most popular way FTBs save for a deposit over the years, typically using a combination of Easy Access Savings accounts (42%), Cash ISAs (29%), and the Lifetime ISA (22%).

Interestingly, affordable homeownership schemes, designed to help FTBs onto the property ladder have all become less popular in the last 6 months. The number considering the First Homes Scheme or Rent-to-buy / Rent-to-own has fallen over the year from 31% to 22%, and 26% to 20% respectively. Only 9% said they were considering the Mortgage Guarantee Scheme – a measure the Labour Party have pledged to make permanent if they come into power on July 4th.

The Lifetime ISA (LISA) by comparison has already been a lifeline for a whole generation of FTBs in the UK.  According to the latest 2022-23 HMRC data, over 170,000 FTBs have been supported to buy their first homes far sooner than would have otherwise been possible thanks to the fantastic 25% government bonus on deposit savings up to £4,000 each tax year. And yet, despite its growing popularity – Moneybox has seen a 42% increase in the number of new customers opening a Lifetime ISA over the last twelve months versus the previous twelve months – the product rules have not been reviewed by the Treasury since the LISA was first introduced in 2017.

With one in five (22%) FTBs now saving for a home using the LISA, there is a clear opportunity for the new government to futureproof the LISA so that more people can save more money towards their all-important deposit.

Brian Byrnes, Head of Personal Finance at Moneybox comments: “With the General Election just around the corner, manifesto pledges from political parties have fallen short of providing much-needed reassurance and tangible financial support to first-time buyers who have been navigating significant challenges over the last few years. 

“With house price growth significantly outpacing wage growth in recent decades, the solutions needed to sustainably boost homeownership without further inflating house prices are complex and will take some time to bear fruit. That is why we at Moneybox are calling for the incoming government to commit to pragmatic measures that can be delivered in the near term, such as future-proofing the LISA. 

“Committing to a regular review of the property price cap and introducing an annual emergency withdrawal allowance will ensure the product continues to meet the needs of all those who need it most into the future and will better help savers weather the cost of living crisis and any future unforeseen costs.

”These simple steps will help more aspiring first-time buyers save a bigger deposit as well as help generations of young savers build and embed positive saving behaviours that will boost long-term resilience and prosperity.”

ENDS

About Moneybox:

Moneybox is the award-winning app on a mission to help people build wealth with confidence so they can enjoy life, today and tomorrow. Launched in 2016 by co-founders Ben Stanway and Charlie Mortimer, the company has experienced rapid growth, and today has over £7bn in assets and a community of more than 1.3 million customers. Moneybox provides a range of great value products and services, across saving, investing, home-buying, and retirement as well as helpful tools and educational content, to help people manage and achieve their short, mid, and longer-term financial goals. Moneybox enables customers to set money aside in the way that suits them best using round-ups, regular deposits, or instant payments. In March 2022 Moneybox raised £35m in a Series D funding round, led by Fidelity International Strategic Ventures, existing investors Oxford Capital, CNP, Burda and Breega, plus new investor Polar Capital. This brings total funds raised by the digital wealth manager to £100+ million.