A significant minority of first-time buyers searching for mortgages are entering the market with sizeable deposits despite higher loan-to-value products continuing to dominate demand.
Data from Moneyfactscompare.co.uk shows that while most first-time buyers are still reliant on high LTV borrowing, a notable proportion are targeting deals that suggest far stronger starting positions.
Among consumers comparing fixed-term mortgage deals on Moneyfactscompare.co.uk between 1 and 30 January 2026, almost one in three first-time buyers, or 30%, were looking at 90% LTV mortgages, with a further 12% searching for 95% LTV options. This indicates that many first-time buyers are relying on deposits of between 5% and 10%.
Based on the average UK house price of £271,188, that equates to deposits ranging from around £13,560 to £27,120.
COST DIFFERENTIAL
However, the data also reveals that almost one in three first-time buyers, 31%, are seeking mortgages at sub-75% LTVs. A 25% deposit on the average UK home would require a deposit of around £67,800, underlining that a distinct cohort of first-time buyers are in a comparatively strong financial position.
The cost gap between borrowers with smaller and larger deposits remains stark. Those with less equity could be paying around £174 more per month than borrowers with higher deposits, even when borrowing the same amount.
The analysis also highlights similar patterns among homemovers. Around two-thirds of existing homeowners, 69%, wait until they have built at least 25% equity before moving up the housing ladder. A further one in seven, or 16%, are looking to move with around 15% equity.
The figures are based on consumers comparing fixed-term mortgage deals on Moneyfactscompare.co.uk, segmented by borrower type and LTV, with average mortgage rates correct as at 30 January 2026. Calculations assume £250,000 borrowed over 25 years on a capital and interest repayment basis.
TWO-TIER MARKET
Adam French, head of consumer finance at Moneyfactscompare.co.uk, said: “The widespread of first-time buyer LTV demand reflects a housing market increasingly shaped by unequal starting points.
“While many first-time buyers are stretching themselves with 90 – 95% LTV mortgages due to deposit constraints, a notable minority are entering the market with substantial deposits, often helped by family support or inheritance.
“The concern is that it is creating a two-tier market where buyers with higher deposits can access cheaper rates and lower monthly repayments, while others pay a hefty premium.
“For second-time buyers and remortgage customers, the data shows equity remains king, with most waiting to build at least 25% equity. Although wise buyers should note that materially cheaper average rates kick in at around 15% equity.”
