
"In an environment where inflation remains unpredictable and the job market is softening very rapidly, first-time buyers may find themselves trapped in costly deals they can’t easily refinance their way out of"
- Richard Sexton - HouzeCheck
First-time buyers (FTBs) are increasingly turning to high loan-to-value (LTV) mortgages, according to new analysis of UK Finance data by HouzeCheck.
The digital-first surveying portal highlights that recent regional mortgage market figures reveal a subtle but significant change in how first-time buyers fund their home purchases.
In the first quarter of 2024, the average LTV for new FTB mortgages in England was 74.7%. By the first quarter of 2025, it had risen to 77.1%, an increase of 2.4 percentage points.
“The days of massive equity cushions are over – and they are unlikely to return anytime soon," said Richard Sexton, commercial director of HouzeCheck (pictured). "First-time buyers are borrowing more to finance property purchases. Some would argue that it’s a sign of confidence in the market. I don’t think that’s the case: it’s a sign that potential first-time buyers living in rented accommodation can no longer save for deposits,"
"As landlords have left the market in the face of unhelpful regulation, the supply of rented property has shrunk, and rents have risen. There’s no sense that first-time buyers have hit a ceiling in how much they can stretch, either – look at the increasing number of zero deposit mortgages available now.”
LTVs for new first-time buyer mortgages are notably higher in Scotland, where they rose from 81.0% in Q1 2024 to 82.4% in Q1 2025. These figures are higher than in any other UK home nation or English region.
“The average LTV for a new first-time buyer mortgage in Scotland is high, even compared to London. And it’s still rising," explained Sexton. "The problem is that buyers in Scotland haven’t been in a position to save for decent deposits for longer because the landlord exodus started earlier there. Housing is a devolved matter and anti-landlord legislation started earlier north of the border, nudging up rents and limiting tenants’ ability to tuck money away,"
"First-time buyers in Scotland are increasingly turning to high LTV mortgages to get a foothold on the property ladder. Zero-deposit mortgages may lower the barrier to entry today, but they leave borrowers exposed to downturns in house prices. With no equity buffer, or just a thin one, negative equity becomes a real risk — especially if the market softens or economic conditions tighten unexpectedly.”
He added, “What’s more, high LTV borrowers often face higher interest rates, larger fees, and elevated monthly repayments. Income shocks, such as job losses or rising living costs, could quickly push borrowers on stretched budgets to breaking point. In an environment where inflation remains unpredictable and the job market is softening very rapidly, first-time buyers may find themselves trapped in costly deals they can’t easily refinance their way out of.”
While Scotland holds the highest average LTVs for new FTB loans, the fastest rises are seen in East Anglia, up from 73.6% in Q1 2024 to 76.2% in Q1 2025; the South East, from 74.0% to 77.3%; and Greater London, increasing from 67.1% to 72.0%.
Loan-to-value ratios for home movers in England are following a similar upward trend. The average LTV for new home mover mortgages increased to 64.9% in Q1 2025 from 63.1% a year earlier, a 1.8 percentage point rise.
“Critically, if high LTV borrowing becomes the new normal, it risks increasing systemic risk across the housing market," warned Sexton. "We need to bear that in mind in England, where there’s some very misguided landlord legislation on the horizon,"
He concluded, "A generation of buyers taking on maximum leverage to buy homes when prices are by no means rising could create a house of cards, one that lenders, regulators, and the wider economy may ultimately have to reckon with. Responsible lending and robust affordability testing are now more vital than ever to prevent enthusiasm from tipping into overextension. This is a trend the mortgage industry needs to keep an eye on.”