Mortgage applications from first-time buyers (FTBs) fell by 3.5% year-on-year in the third quarter of 2026, but proved more resilient than demand from existing homeowners, the latest figures have suggested

Yorkshire Building Society analysis of data from CACI showed that a total of 118,881 FTBs applied for a mortgage between 29 June and 27 September, down from 123,149 a year earlier. Applications from home movers fell by 10.2% to 97,732, while remortgage applications rose by 12% to 114,717 as borrowers sought better deals amid rising interest rates.

The slowdown follows an "exceptionally strong period" buyer activity, according to the building society, after transactions fell to a decade low in 2023. Transactions rose to 332,100 in 2024 and 391,200 in 2025, but affordability pressures and economic uncertainty have begun to temper demand.

Max Shepherd, group economist at Yorkshire Building Society, said: "The challenge for FTBs today is that mortgage rates have increased considerably since the beginning of H2, with affordability still a challenge, as moves have been driven by the global impacts of the Iran War.

"What we’re seeing now is not a sudden fall away in demand, but a reflection of rising interest rates dampening affordability. The fact that first-time buyer activity has held up considerably better than the home mover market suggests the aspiration to own a home remains very strong.

"This demonstrates that confidence remains sensitive to wider economic conditions and interest rates."

Shepherd added that first-time buyers were an important catalyst for the wider housing market, supporting transactions further up the property ladder and helping chains to progress. Continued collaboration between lenders, the Government and the wider industry would be essential to improving access to homeownership, he argued.

It comes as the Government is preparing to introduce its Your First Home scheme, intended to replace the existing Help to Buy initiative. Yorkshire Building Society has also introduced measures to support buyers, including a £5,000 deposit mortgage for properties worth up to £500,000 and lending changes introduced in 2025 to enable eligible borrowers to access larger loans.

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