First-time buyer mortgage price wars are opening the door to increased use of later life lending by the Bank of Family, according to Key Partnerships.

The group has predicted an increase in interest from Bank of Family advisers, and their customers, looking to gift to first time buyers so that they can boost deposits they have already saved and cut LTVs and rates and expects growing interest.

Key Partnerships, the referral business of Key Group, reported that 63% of equity release customers use housing wealth across a range of purposes, reflecting how modern lifetime mortgages are a multi-use product that support the needs of a broad profile of customers.

Director at Key Partnerships, Damon O’Connell, said that the first-time buyer market is a “key part” of the mainstream mortgage market, but added that raising a deposit is challenging for many buyers, as demonstrated by the size of required deposits.

“Many first-time buyers will be quite rightly tempted by 98% or 95% LTV mortgages as they mean less time saving,” O’Connell said. “Yet, even if affordability criteria can be achieved, the monthly costs of servicing these mortgages can create challenges and impinge on lifestyle objectives or the ability to contribute to pensions or other investments.

“Increasingly, we are seeing the Bank of Family using their property wealth not to fund an entire deposit as that will affect other financial goals but to help supplement deposits already saved so that their children or grandchildren can secure a lower LTV mortgage and a lower rate.”

O’Connell also said that advisers need to “expand their fields of vision” to consider how later life lending products, including modern lifetime mortgages which include repayment options and flexible early repayment terms, can support both their older customers and first-time buyers.

He added that referral relationships can ensure “opportunities are not missed” in the later life lending market, while also supporting the development of new income streams and helping deliver good customer outcomes aligned to Consumer Duty obligations.

“Advisers taking that approach are showing a commitment to holistic advice and exploring how family wealth, particularly in respect of property, can be used efficiently across the generations,” O’Connell said.

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