Affordability isn’t the main barrier, trade body says
Three and a half million UK households who could have bought a home since the financial crisis have yet to do so — mainly due to regulatory constraints rather than financial limitations, a new report from the Intermediary Mortgage Lenders Association (IMLA) has suggested.
The study, The Mortgage Affordability Paradox: The Picture in 2025, updates IMLA’s 2021 findings, which previously estimated the number of delayed first-time buyers at 2.7 million. Despite many households being able to afford mortgage repayments, restrictive lending policies are keeping them out of the housing market, according to the report.
While mortgage rates increased following the 2022 mini Budget, the report notes that 330,000 first-time buyers were still able to purchase property in 2023 — 15% above the average seen over the past 17 years. According to IMLA, this points to strong demand being held back by policy rather than affordability.
Kate Davies (pictured), executive director at IMLA, said the findings support previous research showing many potential buyers could manage mortgage costs but are unable to access lending under current rules.
She criticised loan-to-income (LTI) caps that restrict how many high-LTI mortgages lenders can offer. Davies said such policies are “blocking many sensible borrowers from buying their first home.”
“The government’s promise to reduce financial services red tape is welcome, and we await the outcome of the FCA’s mortgage rule review with interest,” she added. “But we also need to change the narrative which tells aspiring first-time buyers that homes are unaffordable.”
According to Davies, lenders are already adjusting their products, offering longer terms, greater income multiples, and higher loan-to-value options. But regulatory reform is needed to significantly improve access for new buyers.
“First-time buyers are the lifeblood of a healthy housing market,” she said, highlighting both financial and wellbeing benefits of homeownership. She cited previous IMLA research showing that someone who buys a home with a 95% loan-to-value mortgage could be £352,000 better off after 30 years compared to renting.
“We need to focus on unlocking the huge pent-up demand illustrated by this report by making it easier for people to take that first step onto the property ladder, and broadcasting the message that, contrary to common perception, millions more can afford to buy their own home,” Davies said.
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