FTBs in ‘driving seat’ for housing market in 2026, according to big lender

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Nationwide's senior economist says first-time buyer activity was up around 20% on last year, with high loan-to-value lending at its highest level for more than a decade.

20th Jan 20260 462 1 minute read Simon Cairnes

First-time buyers are set to be key drivers of the housing market in 2026, according to Nationwide, with the lender expecting housing market activity to “strengthen” further.

Andrew Harvey (pictured), the lender’s Senior Economist, says: “With price growth well below the rate of earnings growth and a steady decline in mortgage rates, affordability constraints have eased somewhat over the past year, helping to underpin buyer demand.”

Decade high

He adds that the first-time buyer share of house purchase activity was “above the long run average”, supported by “easier credit availability”. Nationwide says the share of high loan-to-value lending — where buyers put down a deposit of 15% or less — is “reaching its highest level for over a decade”.

According to Harvey, “First-time buyer activity over the last year was around 20% higher than 2024 levels.”

Nationwide’s benchmark figures reveal that a buyer earning the average UK income and purchasing a typical first-time buyer property with a 20% deposit would have a monthly mortgage payment equivalent to 32% of take-home pay — “slightly above the long-run average of 30% and well below the recent high of 48% recorded in 1989.”

Nine years to save for a deposit in the capital, compared with around four years in the North.”

However, Harvey says deposits remain a major hurdle, particularly for those renting privately. “A 10% deposit on a typical UK first-time buyer property is around £23,000,” and he adds that even saving 10% of average net pay (c. £320) per month would take a prospective buyer “nearly six years” to accumulate this.

He also points to major regional variations. A 10% deposit in London is “over three times larger than the equivalent in the North”, meaning it would take “nine years” to save for a deposit in the capital, compared with “around four years” in the North.

Of the broader market, Harvey says: “We expect housing market activity to strengthen a little further as affordability continues to improve gradually via income growth outpacing house price growth and a further modest decline in interest rates.”

Tagsfirst-time buyers Nationwide 20th Jan 20260 462 1 minute read Simon Cairnes Share Facebook X LinkedIn Share via Email