First-time buyer applications dip as home movers retreat further

The UK mortgage market cooled in the third quarter of 2026, as rising rates pushed affordability further out of reach for many buyers. First time buyers felt the pressure but held up considerably better than the rest of the market.

Yorkshire Building Society commissioned data and technology consultancy CACI to analyse mortgage application trends. The data recorded 118,881 first time buyer applications between 29 June and 27 September 2026. That marks a 3.5% decline against the same period in 2025, when 123,149 applications were submitted.

Among home movers, the picture was sharper – a 10.2% fall took applications from 108,844 in Q3 2025 to 97,732 in Q3 2026. A softening home mover market compresses pipeline from above, while first time buyer demand holds the base.

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What is the remortgage market doing?

Remortgaging moved in the opposite direction. Applications climbed 12.0% year-on-year, from 102,424 to 114,717. This pattern is consistent with borrowers locking in deals ahead of further rate movement.

“It’s important to view these figures in the context of what has been a strong couple of years for first-time buyers,” said Max Shepherd, group economist at Yorkshire Building Society. “After activity fell to a decade low in 2023, we’ve seen two years of significant recovery, driven by improving affordability, and lower mortgage rates and innovation across the lending market.”

First time buyer transactions reached 332,100 in 2024 and 391,200 in 2025, according to Yorkshire Building Society. Against that trajectory, the Q3 2026 figures represent a moderation rather than a collapse.

“The challenge for FTBs today is that mortgage rates have increased considerably since the beginning of H2, with affordability still a challenge, as moves have been driven by the global impacts of the Iran War,” Shepherd said. “What we’re seeing now is not a sudden fall away in demand, but a reflection of rising interest rates dampening affordability.”

The question for brokers advising first time buyer clients is whether this slowdown deepens. Rate movements are reshaping activity across all buyer types, not just those purchasing for the first time. The remortgage pipeline for 2026 tells a similar story.

Why does first time buyer activity matter to UK mortgage brokers?

“First-time buyers are an important catalyst for the housing market as a whole, supporting transactions further up the ladder and helping to keep chains moving,” Shepherd said. “Continued collaboration between lenders, Government and the wider industry will be essential if we are to ensure more people have the opportunity to achieve their homeownership ambitions.”

Yorkshire Building Society points to its own lending posture as evidence of that commitment. In 2025, it was among the earliest lenders to implement the new loan-to-income regulatory framework.

Yorkshire's £5k Deposit Mortgage lets buyers purchase a home worth up to £500,000 with a £5,000 deposit. The product has helped thousands of first-time buyers onto the ladder.

Government support: what comes next?

The Government’s Your First Home scheme adds a policy dimension to the picture. The Help to Buy-style program will offer 20% government-backed equity loans to buyers with a 2.5% deposit. Pre-registration is expected to open before the end of 2026, with full details to be confirmed at the Autumn Budget on 28 October. Property experts have raised questions about whether the scheme’s new-build restriction risks repeating price-inflation concerns seen under its predecessor.

For brokers working with first time buyers, the state of the 2026 housing market for aspiring homeowners remains finely balanced. Those clients are still in the market. Affordability, and the direction of rates, will determine how many get to the finish line.