First-time buyers enjoy biggest choice of low-deposit mortgages in UK since 2008

Would-be first-time buyers have the biggest choice of low-deposit mortgages for at least 18 years, new data shows, suggesting that 2026 is looking positive for those trying to get a foot on the property ladder.

In recent months many banks and building societies have been loosening their affordability rules or launching deals that let people borrow 95% of the property’s value, and in some cases more than that.

Saving up a deposit is one of the biggest challenges facing would-be homeowners, who can find that each month most of their money is being swallowed up by rent and living costs.

At the start of this month there were 537 deals available that let people borrow 95% of a property’s value, the financial data provider Moneyfacts said this week. That is almost double the 274 available in February 2024.

Rachel Springall at Moneyfacts says the number of 95% “loan-to-value” (LTV) deals now on sale is the highest since March 2008. She adds: “This year is setting itself up to be a fruitful one for first-time buyers, and really, they need all the help they can get amid the lack of affordable housing.”

At the time of writing, new two- and five-year fixed-rate deals for first-time buyers hoping to borrow 95% started at about 4.47% and 4.53%, respectively.

If you can stump up a deposit of 10%-plus, there will be even more deals to access. At the start of February, there were a record 981 mortgages on the market that allow people to borrow 90% of a home’s value.

Earlier this month, Santander grabbed headlines when it launched a mortgage for first-time buyers that lets people borrow up to 98% of the property’s value. The deal is a five-year fixed-rate loan requiring a deposit of at least £10,000.

While Santander is the largest lender so far to go above 95%, it is not the first. The Skipton and Yorkshire building societies have deals that allow people to borrow up to 100% and 99% of a property’s value, respectively, alongside a few other products of this type.

However, there are often restrictions and exclusions when it comes to who can apply and which properties are eligible.

New research issued this week by the Building Societies Association (BSA), a trade body, claims that many aspiring first-time buyers “could be closer to owning their own home than they think”. However, it says too many are ruling themselves out before exploring what is possible.

Its findings showed that almost half (47%) of people who want to buy their own home had never spoken to a lender or mortgage broker to check what options were available to them. Among those who had, 46% had not done so in the last year.

Yet when shown the various deals available from building societies that require only a small deposit, or no deposit at all, two-thirds of those trying to get on the property ladder said they would be able to buy sooner than they thought. The BSA said this highlighted “a clear gap between perception and reality”.