First-time buyer numbers have exceeded 350,000 according to UK Finance in each of the past two years, having been below 260,000 in 2013 and somewhat less than that a year earlier.

Yet there is little evidence to suggest that the deposit hurdle facing first-time buyers has eased substantially. Though we saw an increase in lending above a 90% loan-to-value (LTV) ratio (at a progressively lower cost to borrowers) in the run-up to Covid-19, lending remained confined to 5% of the mortgage market, some way short of the 14% seen prior to the Global Financial Crisis.

And in recent weeks, as the coronavirus situation has unfolded, we have seen the high street lenders reduce the availability of higher LTV lending.

It is, of course, too early to tell the extent to which it will have a lasting impact on mortgage availability, or indeed the effect it will have on government plans to encourage lenders to offer more long-term fixed-rate mortgages at higher LTVs (i.e. with a lower deposit). But it further brings into question the extent to which lending at higher LTVs can make a material difference to the numbers fulfilling their aspiration of home ownership over the mid-term.

Bridging the deposit gap

Perhaps, more importantly, we have seen a change in the way deposits are funded. There has been significant increase in the support from the bank of Mum and Dad, as parents and grandparents more frequently help younger generations to get their first step on the housing ladder.

In all likelihood, this has now become an entrenched means by which people graduate to home ownership. But in the short term, the falls in the stock market and the knock-on impact this may have on older households’ pension provisions may curtail its availability.

That is likely to place more emphasis on Help to Buy, as and when housebuilders resume construction. Before recent events Help to Buy was supporting over 40,000 first-time buyers per annum across England, but even as life returns to normal it will take time to scale back up and it is scheduled to cease in April 2023.

_{Read the articles within Spotlight: Changing drivers of tenure below.}