More than half of all homes bought with a mortgage in 2022 were snapped up by first-time buyers.

The number of first-time buyers hit its second highest level for 14 years in 2022.

An estimated 370,000 people got on to the property ladder last year, according to Yorkshire Building Society.

The total was the highest for more than a decade, with the exception of 2021, when 400,000 people bought their first home.

2021 was an exceptional year for the housing market, as the pandemic-induced search for space and stamp duty holiday led to elevated levels of activity.

Despite the slight year-on-year fall between 2021 and 2022, the number of first-time buyers last year was still 5% higher than in 2019, before the pandemic struck.

First-time buyers accounted for 53% of all people purchasing a property with a mortgage during the year, up from 50% in 2021 and 41% a decade ago.

Why is this happening?

Demand from first-time buyers was fuelled by a combination of high employment levels and low borrowing costs for much of the year.

Low mortgage rates helped to offset the increase in the average price paid for a home, which rose 10% from 2021 to 2022 to stand at £272,500.

The total is also likely to have been boosted by first-time buyers rushing to take advantage of the government’s Help to Buy Equity loan scheme before it closed to new applicants on 31 October 2022.

The initiative enabled people to purchase a property with just a 5% deposit, which the government topped up with a 20% equity loan that was interest-free for the first five years.

New Right to Shared Ownership scheme launched

Who does it affect?

The fact that so many people were able to purchase their first home in 2022 is not just good news for those individuals, but also for the housing market as a whole.

First-time buyers play a vital role in the market by purchasing properties at the bottom of the ladder, enabling existing homeowners to trade up it.

However, first-time buyer numbers are likely to be lower this year due to higher mortgage rates, combined with the cost-of-living squeeze.

What help is available for first-time buyers?

While the government’s Help to Buy equity loan scheme may have closed, there is still plenty of help available to those purchasing their first home.

First Homes helps first-time buyers, key workers and local people to purchase a home at a 30% discount to its market price, while Shared Ownership enables people to buy a share in a property and pay rent on the rest.

Meanwhile, the Mortgage Guarantee Scheme enables both first-time buyers and home-movers to purchase a property with just a 5% deposit.

The scheme, which has been extended by a year to run until 31 December 2023, encourages lenders to offer 95% mortgages by having the government guarantee the portion of the loan over 80%.

First-time buyers saving for a deposit can also use the Lifetime ISA, under which you can save £4,000 a year. The government then adds a 25% bonus – up to a maximum of £1,000 annually. The money must be used to either purchase a first home or for retirement.

The government has also increased the threshold at which stamp duty kicks in for first-time buyers from £300,000 to £425,000 on homes costing up to £625,000 until April 2025.

Key takeaways

  • An estimated 370,000 people stepped on to the property ladder in 2022
  • The figure was the second highest in the past 14 years, behind only 2021 when the pandemic and stamp duty holiday elevated activity levels
  • First-time buyers accounted for 53% of all people purchasing a property with a mortgage during 2022