Almost one in five first-time buyers seeking sub-60% LTV mortgages

While higher loan-to-value (LTV) mortgages dominate first-time buyer demand a significant minority are seeking sub-60% LTV deals, fresh data from  Moneyfactscompare.co.uk can reveal.

Of those looking for fixed term deals on moneyfactscompare.co.uk:

• Almost one in three (31%) first-time buyers are opting for 90% LTV mortgages, and a further 10% are looking at 95% LTV options. This hints at many first-time buyers relying on 5-10% deposits. This translates to £13,650 to £27,300 at the average UK house price of £272,995 [source].
• Almost one in five (17%) first-time buyers are seeking mortgages with sub-60% LTVs. For context, a 40% deposit on the average UK house price would require a deposit of around £110,000, highlighting that there is a distinct group of first-time buyers in a favourable financial position.
• Borrowers with smaller deposits, or those who have accumulated less equity, could be paying £134 more per month more compared to those with a larger deposit or equity to borrow the same amount.
• Homeowners with around 25% equity are more likely to make their next next move on the housing ladder, with this threshold potentially acting as a key financial or psychological milestone before progressing to a new property.

Adam French, Head of News at Moneyfactscompare.co.uk, said:

"First-time buyers in particular are feeling the weight of affordability pressures, with many relying on more expensive high LTV loans due to the challenges of raising a sizeable deposit. Meanwhile, more established homeowners who have accumulated greater equity, are in a better position to benefit from lower LTVs and more competitive mortgage rates.

“However, a significant proportion of first-time buyers are seeking mortgages at lower LTVs, suggesting that many are receiving significant financial support from family contributions or inheritance. This marks a growing divide in the housing market as those without additional financial assistance face greater financial strain, particularly as they are more vulnerable to rising rates or potential housing market corrections."