Half of all first-time buyers in the UK are now taking out mortgages with a loan-to-value ratio of 90% or more according to new research from fintech firm Armalytix.
The analysis shows that one in seven first-time buyers are borrowing at 95% LTV, now that such products have returned to the market, while just 22.6% of repeat buyers are borrowing above the 90% threshold.
The figures point to a growing two-tier market in which those entering the property ladder for the first time are taking on greater financial risk and exposure.
Family wealth continues to play a critical role. Armalytix found that a quarter of high-LTV first-time buyers received family gifts averaging £10,000 – a sum that, while helpful, is often insufficient to shift them into a lower-risk mortgage band.
FAMILY GIFTS
By contrast, first-time buyers able to contribute larger family gifts of around £30,000 were more likely to secure better rates and reduce financial pressure.
Mike Ward, Chairman of Armalytix, says: “High LTV has become the new normal for first-time buyers.
“While government schemes such as the Lifetime ISA offer some support, it is increasingly family contributions that determine who can move forward and who remains financially stretched.”
Despite the availability of government assistance, uptake remains limited. Only 32% of eligible first-time buyers used a government ISA this year, the data shows.
Repeat buyers, meanwhile, are less dependent on gifts but tend to benefit more when they do receive them.
HIGH-PRESSURE MARKET
The average gift covered 25.8% of purchase value among non-first-time buyers, compared with 13.1% for first-time buyers, reflecting the advantage of accumulated equity and intergenerational wealth transfer.
Ward adds: “First-time buyers are navigating a high-pressure market with limited room for error.
“Recognising the balance between borrowing risk, family support and government assistance is vital to improving both affordability and long-term financial outcomes.”
