The number of first-time buyers taking mortgages worth at least 4.5 times their income jumped by two-thirds last year as lenders increased their use of higher income multiples.
New FCA data obtained through a Freedom of Information request by Plum shows 45,800 first-time buyer mortgages were advanced at loan-to-income ratios of 4.5 or above during 2025.
That represents a 66% increase from 27,500 in 2024 and significantly outpaces the 16% rise in overall first-time buyer mortgage numbers over the same period.
Higher multiples remain a relatively small part of the overall market, however, with around 12% of the 380,716 first-time buyer mortgages advanced last year at 4.5 times income or above.
HIGHER MULTIPLES
The sharpest increase comes at the upper end of the market.
The number of first-time buyer mortgages at 5.5 times income or higher increased more than tenfold, from 420 in 2024 to 4,628 last year.
Of these, 4,501 were between 5.5 and 6.5 times income and 127 exceeded 6.5 times income.
The largest group of first-time buyers continues to borrow between 3.5 and 4.5 times income, accounting for 160,928 mortgages – or 42.3% of the total.
Another 29.8% borrowed between 2.5 and 3.5 times income.
The increase in higher-LTI borrowing comes as regulators have moved to give individual lenders greater flexibility over the proportion of mortgages they can advance at higher income multiples.
FIRST-TIME BUYER GROWTH
The FCA figures also show the overall number of first-time buyer mortgages increased from 327,001 in 2024 to 380,716 last year.
Mortgages taken by single-income first-time buyers rose 17% to 174,769, while joint-income borrowing increased 16% to 205,947.
Rajan Lakhani (main picture), Personal Finance Expert at Plum, says: “Traditionally banks loaned four to four and a half times a first-time buyer’s income. But the loosening of lending rules means some lenders have offered loans of up to seven times their salaries if they meet certain criteria including high income and excellent credit scores.
“While the shake-up has been positive in allowing first-time buyers to get on the housing ladder quicker, there are different strategies out there for buyers who don’t want to take on more debt than they have to.
“Building a deposit through a Lifetime ISA can mean you borrow less, and mitigate exposure to any jump in interest rates later on.
“It also offers the unique appeal of free money, the exact opposite of a mortgage lender, which charges you interest on every penny.”
DEPOSIT TRADE-OFF
Lakhani says buyers should consider the trade-off between increasing their mortgage borrowing and building a larger deposit.
He adds: “The urgency to get on the housing ladder means first-time buyers are borrowing more, when ideally they would be trying to save more as well.
“A bigger deposit is often a greater weapon in the long-term than a bigger loan. For a start, the process of qualifying for a loan is often quicker for those with greater savings, and the cost of repaying the loan is usually cheaper.
“Having a bigger chunk of money saved usually means you can unlock lower interest rates and make considerable monthly savings.
“For example, a buyer with a 20% deposit on an average first-time buyer home is likely to save £132 monthly compared to someone with a 10% deposit based on a price of £225,525 and interest rates of 5.06%.
“A Lifetime ISA, with its 25% government bonus, is designed precisely to help people get there without taking on income multiples they may later regret.”
