First-time buyers across the UK are increasingly turning to high loan-to-value (LTV) mortgages as soaring rents make it harder to save for deposits, according to new analysis of UK Finance data by digital surveying portal HouzeCheck.
In England, the average LTV on a new first-time buyer (FTB) mortgage rose from 74.7% in Q1 2024 to 77.1% in Q1 2025 – a 2.4 percentage point increase.
The shift suggests more buyers are stretching their borrowing to get on the property ladder amid persistently high rental costs and limited affordability.
Scotland saw the highest average LTVs of any UK region, rising from 81.0% in Q1 2024 to 82.4% in Q1 2025.
MORE DEBT
Buyers in East Anglia, the South East, and Greater London are also taking on significantly more debt. Average LTVs in East Anglia rose from 73.6% to 76.2%; in the South East from 74.0% to 77.3%; and in London from 67.1% to 72.0%.
Richard Sexton, Commercial Director at HouzeCheck, says: “The days of massive equity cushions are over – and they are unlikely to return anytime soon.
“First-time buyers are borrowing more to finance property purchases. Some would argue it’s a sign of confidence in the market.
“I don’t think that’s the case: it’s a sign that potential first-time buyers living in rented accommodation can no longer save for deposits.”
And Sexton attributes much of this shift to the ongoing exodus of private landlords from the rental market. “
He adds: “As landlords have left the market in the face of unhelpful regulation, the supply of rented property has shrunk, and rents have risen. There’s no sense that first-time buyers have hit a ceiling in how much they can stretch, either – look at the increasing number of zero deposit mortgages available now.”
DEVOLVED POLICY CHANGES
Sexton reckons that landlord disinvestment began earlier in Scotland due to devolved policy changes, giving tenants less time to build deposits.
And he warns: “Zero deposit mortgages may lower the barrier to entry today, but they leave borrowers exposed to downturns in house prices. With no equity buffer, or just a thin one, negative equity becomes a real risk.”
If high LTV borrowing becomes the norm it could introduce systemic risk across the housing market.
Sexton also cautions that if high LTV borrowing becomes the norm, it could introduce systemic risk across the housing market.
He says: “We need to bear that in mind in England, where there’s some very misguided landlord legislation on the horizon. A generation of buyers taking on maximum leverage to buy homes when prices are by no means rising could create a house of cards.”
The trend is also evident among home movers, with the average LTV on a new mortgage rising from 63.1% to 64.9% year-on-year.
Sexton adds: “Responsible lending and robust affordability testing are now more vital than ever to prevent enthusiasm from tipping into overextension.”
