New data reveals rising demand for sub-75% LTV products
While higher loan-to-value (LTV) products continue to attract many first-time buyers, a sizeable minority are entering the market with materially larger deposits, according to new data from Moneyfacts.
The figures, based on users searching for fixed-rate products on price comparison website Moneyfactscompare.co.uk, indicate that around 30% of first-time buyers are focusing on 90% LTV mortgages, with a further 12% targeting 95% LTV loans. On an average UK property price of £271,188, this implies deposits in the region of 5% to 10%, or roughly £13,560 to £27,120.
At the same time, about 31% of first-time buyers are looking for products below 75% LTV. On the same average price, a 25% deposit would be about £67,800, underlining the presence of a distinct group of new buyers coming to the market with stronger upfront capital positions.
The research suggests that the cost gap between low- and high-deposit borrowing remains significant. Moneyfactscompare.co.uk’s analysis indicates that customers with smaller deposits, or with limited equity in their existing property, could be paying around £174 more each month than borrowers able to access lower LTV bands for the same loan size.
The pattern extends beyond first-time buyers. Many existing owners appear to be waiting until they have accumulated at least 25% equity before moving home. The data show that roughly 69% of homemovers have reached this 25% equity threshold before trading up, with a further 16% looking to move once they have around 15% equity.
“The widespread of first-time buyer LTV demand reflects a housing market increasingly shaped by unequal starting points,” said Adam French, head of consumer finance at Moneyfactscompare.co.uk. “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.”
To level the playing field, Mary-Lou Press, NAEA Propertymark president stressed the need for sustained action to boost housing supply.
“We need to build the right homes in the right places, alongside targeted support for first-time buyers to help them save and access affordable finance,” she added. “Without this, homeownership risks becoming increasingly out of reach for many aspiring buyers, particularly younger households and those without financial backing.”
Want to be regularly updated with mortgage news and features? Get exclusive interviews, breaking news, and industry events in your inbox – subscribe to our FREE daily newsletter. You can also follow us on Facebook, X (formerly Twitter), and LinkedIn.
