Around 3.5 million households who might have expected to buy a home since the financial crisis are still waiting to enter the market, analysis from the Intermediary Mortgage Lenders Association (IMLA) has revealed.

The association’s findings suggested these households have been held back by unnecessary barriers rather than the ability to meet mortgage payments.

IMLA first published a report in 2021 which at the time, concluded that 2.7 million potential purchasers who would have been expected to buy their first home had not done so, based on propensity to buy versus actual property purchase figures.

The association’s latest update of the report has now indicated that this figure has grown to 3.5 million, concluding that “overly stringent regulation” was a major contributing factor.

“Our research backs up several previous studies which conclude that far more people could reasonably afford to buy homes and comfortably service a mortgage than current regulations and attitude to risk allow,” IMLA executive director, Kate Davies, commented.

“Clearly, more action is needed to help first-time buyers. In particular, the LTI flow limit restricting how many mortgages lenders can offer at higher loan-to-income levels is blocking many sensible borrowers from buying their first home.

“The Government’s promise to reduce financial services red tape is welcome, and we await the outcome of the FCA’s Mortgage Rule Review with interest. But we also need to change the narrative which tells aspiring first-time buyers that homes are unaffordable.”

The latest IMLA research also observed that despite the higher mortgage rate environment in the aftermath of the Liz Truss premiership, 330,000 first-time buyers got onto the housing ladder last year.

This figure is 15% higher than the long-term average of the past 17 years, which IMLA said “clearly demonstrates supressed demand”.

“First-time buyers are the lifeblood of a healthy housing market, and homeownership confers a range of benefits on the population, from security to improved mental and physical wellbeing, not to mention enormous long term financial benefits,” Davies added.

“We need to focus on unlocking the huge pent-up demand illustrated by this report by making it easier for people to take that first step onto the property ladder, and broadcasting the message that, contrary to common perception, millions more can afford to buy their own home.”

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