The value of the first-time buyer (FTB) economy, in terms of both lending and spending, is set to reach a total of £74.1bn by 2025.

According to new research by Coventry for intermediaries, in partnership with the Centre for Economics and Business Research (Cebr), mortgage lending to this segment of the market alone is predicted to reach £71bn by 2025, which is 26% above the forecast lending for the whole of 2023 (£56.5bn). In 2024, this is set to increase by 16% to £65.3bn.

Analysis by Cebr also showed that these borrowers are expected to spend an average annual total of £3.1bn on extra costs relating to home purchase by 2025.

Therefore, the total contribution of aspiring homeowners to the housing market is set to reach £74.1bn in two years.

The research formed part of Coventry for intermediaries’ second edition of The First-Time Buyer Economy report, looking at the value that FTBs bring to the housing market and wider UK economy.

Findings from the 1,000 FTBs surveyed across the UK showed that they are currently spending an average of £3,400 on additional upfront costs including moving and legal fees, as well as surveyor, valuation, and mortgage fees. This is £300 higher than the costs cited in last year’s survey and above inflation.

Furthermore, FTBs are estimated to spend £4,900 individually on renovating and redecorating their home within 12 months of moving in, making the combined total spend on top of their mortgage £8,300.

Head of intermediary relationships at Coventry for intermediaries, Jonathan Stinton, said: “There’s no doubt that this year has been challenging for borrowers, with high mortgage rates, inflation and the ongoing cost of living crisis impacting people’s financial decisions. Despite this, new buyers still need and are keen to get onto the property ladder.

“According to our report, FTBs have accounted for almost a third of all UK property transactions over the last five years and are a huge contributor to the UK economy. As the mortgage market and economy stabilises in the next couple of years, we will see even more FTBs ready to enter the market.

“It’s clear that people taking their first step onto the property ladder need more guidance and support during the mortgage journey, particularly around the costs associated with buying a home. With many younger buyers still unaware of some of the fundamental costs involved in purchasing a home, brokers are essential and because of their experience are in the best position to provide this vital information to ensure FTBs are fully prepared for this financial and personal milestone.”

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