First-time buyers account for majority of mortgage sales but stretching deposits

Aneisha Beveridge, research director at Connells Group, explains why first-time buyers stretch their deposits to get on the property ladder.

She said: “The rise in higher loan-to-value lending reflects the fact that lenders have become more comfortable extending larger loans to first-time buyers, supported by changes to lending regulations and a wider range of more innovative mortgage products aimed at those with smaller deposits.

“Despite mortgage rates remaining relatively high, these changes have helped keep the door open to homeownership for many buyers who might otherwise have struggled to save a larger deposit.

“However, low-deposit borrowing doesn’t work everywhere. In areas where house prices are highest, particularly London, buyers often need to put down deposits well into six figures to make the numbers stack up, regardless of the mortgage products available.

“And while first-time buyers are borrowing more, they’re generally doing so cautiously. Many remain mindful of how quickly mortgage costs have changed in recent years, opting for fixed-rate deals that provide certainty over monthly payments and help them manage household budgets in a higher-cost environment.”