Legal & General: Lower rates stoke first-time buyer demand

• Searches for ‘Maximum Age’ increased by 19.8%, while searches for ‘Maximum Loan Term’ surged by 27.9% in September
• Searches for ‘EPC Rating’ increased by 53.5% in September

The latest data from Legal & General Ignite, the free mortgage research and sourcing platform, shows that improved mortgage affordability and lower interest rates are tempting prospective buyers to purchase their first home.

Improving affordability is the key to a brighter market outlook

Searches by brokers on behalf of first-time buyers grew 9.1% in September, following a 5.4% increase in the previous month.

This positive growth in activity shows that lower mortgage rates and improved affordability are encouraging first-time buyers into the market. Average rates on five-year fixed mortgages are hovering around 4.5%, and, according to the latest figures from the Bank of England, mortgage approvals have risen to their highest level in two years, with 64,900 approvals in August.

Overall, the market appears to be on an upward trajectory, with improved activity as we move into Q4 and early 2025.

Buyers committed to finding the right option to make homeownership feasible

Searches for ‘maximum age’ increased by 19.8%, while searches for ‘Maximum Loan Term’ surged by 27.9% in September. Despite sometimes needing to save longer for a deposit, buyers are committed to homeownership and are exploring longer mortgage terms to make buying a property more affordable.

Earlier this year, Legal & General Ignite revealed that there was a 13% increase in 56-65-year-olds searching for their first property in Q1 2024, and September’s statistics indicate that this trend is continuing.

Green issues remain important for buyers

While affordability is a primary concern for buyers, environmental factors and the drive to save on energy bills are still playing a key role in their homebuying decisions. Searches for ‘EPC rating’ increased by 53.5% in September, highlighting the growing interest in green and EPC related mortgages.

This rise may also be linked to the 10% increase in the energy price cap which came into force on the 1st of October. According to recent data from the Mortgage Advice Bureau, 61% of prospective buyers are more likely to make an offer on a property with a good EPC rating. As a result, buyers may be paying closer attention to properties’ energy ratings as they become more mindful of potential energy costs and seek to minimise future expenses.