Loqbox CEO welcomes the scheme but warns it won't reach the millions with no credit history
The government's Your First Home scheme will benefit buyers with good earnings and clean credit histories, but for the estimated four to five million people in the UK with little or no credit record, it changes nothing.
This is the view of Tom Eyre (pictured top), co-founder and chief executive of Loqbox, a credit-building and financial wellbeing platform, speaking to Mortgage Introducer ahead of chancellor John Healey’s first Budget on Wednesday.
Eyre, a member of the Credit Information Governance Body, welcomes the reduction in deposit requirements but warns that structural constraints – including a new-build restriction and an apparent employment requirement – mean the scheme will reach far fewer people than its headline ambition suggests.
"Your First Home will help a subset of first-time buyers," he said. "For people with good affordability who would otherwise have spent three, four or five years saving for a deposit, it brings home ownership forward, and that's welcome. But this isn't a single solution for the housing crisis, and there rarely is one for a problem this complicated."
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A reasonable start – but only a start
Your First Home works by combining a 20% government-backed equity loan with a 2.5% buyer deposit – available on new-build properties only – to reduce the upfront savings burden that has locked so many first-time buyers out of the market. Others in the industry have already warned that the scheme risks repeating the mistakes of Help to Buy without solving the underlying affordability crisis, and Eyre’s numbers bear that out.
On an average first home of around £229,000, a buyer would still need a mortgage of roughly £177,500. At four times salary, that demands an income of approximately £44,400. Anyone outside a traditional two-income household, Eyre said, will find that exceptionally difficult.
The scheme's restriction to new-build properties sharpens the concern. "I can tell you now, there just aren't that many new-build homes available, and the new-build homes that are available, a very small proportion of them I would describe as being affordable for first-time buyers. So you're talking about a race and a real scramble to potentially qualify for those properties."
Eyre also flags that the scheme appears limited to those in employment, carving out a growing share of the workforce. "A huge portion of the population earns irregularly or is self-employed. Many of these schemes often carve out people in those situations, and as that becomes a bigger portion of UK earners, I think we risk normalising a single PAYE salary and forgetting that there are really significant portions of the UK who just don't earn like that."
The credit barrier no scheme is addressing
Your First Home does nothing for the estimated four to five million people in the UK with little or no credit history, Eyre argues. A smaller deposit is irrelevant if a buyer cannot pass affordability checks in the first place, and that, he said, is a barrier the scheme does not touch.
He is blunt about the state of government thinking. "It's non-existent. They don't treat it as part of housing policy." He argues the financial inclusion strategy published last year focuses too narrowly on community lenders and credit unions. Loqbox has helped more than one million people build a credit history since 2017, and Eyre is clear the intervention needs to happen years before a buyer walks into a broker's office.
"Financial inclusion is a proxy for social mobility," he said. "Homeownership is key to social mobility. When all of that is systemically denied to people, it is a problem." Brokers already face pressure to close the support gap for underserved first-time buyers, and credit invisibility, Eyre argues, is the next frontier neither government nor industry has properly addressed.
Stability, pensions and the limits of Help to Save
Eyre's broader Budget ask is simple: do no harm. "When I say do no harm, what I really mean is give people as much confidence as you possibly can that when they make a decision that feels like it's going to affect the next five, 10, 15 years of their life, the policies and the circumstances within which they're doing it are going to last as long as the decisions that they're making."
On pensions, he backs extending auto-enrolment to younger, lower-paid and self-employed workers. "Auto-enrolment has been amazing for pension contributions in the United Kingdom. It's probably been one of the single biggest policy changes that's had the largest immediate impact on consumers."
Help to Save, meanwhile, suffers from a problem deeper than awareness. "When you are on very low income, finding it difficult to find space to save because the cost of living is so high, it's difficult to understand how small amounts contributed regularly will make that much of a difference when everything is so challenging."
What does unregulated AI mean for mortgage borrowers?
Eyre's most striking observation concerns where financially excluded people are increasingly turning for guidance: AI tools. "People are going to ChatGPT or their chosen frontier model of choice. Every financial services business is heavily regulated. ChatGPT, Claude, and so on are not regulated at all, which means you can put any question in and get any frontier model's response completely unregulated."
With the Financial Conduct Authority (FCA) recently signalling it will not regulate frontier AI models, Eyre warns the burden falls ever more heavily on regulated businesses, while consumers keep turning to unregulated tools for answers. "I suspect we will continue as mortgage brokers to receive customers whose financial literacy is relatively low. We cross our fingers and hope that the Budget does some good, and we see that flow through to the people who really need it."
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