Sales of zero-deposit mortgages hit five-year high

Sales of 100% mortgages rose to a five-year high in the first three quarters of 2025, with the North West and South West recording the highest volumes, according to Financial Conduct Authority (FCA) figures obtained through a Freedom of Information request by Compare the Market.

The FCA data show 574 no-deposit mortgages were sold between January and September 2025. That compares with 423 in 2024 and 248 in 2023.

In 2021, sales stood at 452 before falling to 135 in 2022, the year of the former chancellor Kwasi Kwarteng’s mini-budget.

After the North West and South West, the regions with the most sales over the same period were the East Midlands and Yorkshire & Humber.

The figures come as brokers continue to weigh the trade-off between higher rates on zero-deposit products and the lower borrowing costs typically available with even a small deposit. Compare the Market said borrowers may pay more over the full term when taking a 100% loan, because rates can be higher and the range of 95% loan-to-value mortgages is broader.

As an example, it pointed to Skipton Building Society’s 100% five-year fixed Track Record Mortgage, priced at 5.55% as of 24 March 2026. By comparison, Skipton’s 95% five-year fixed mortgage with a £999 fee was quoted at 5.28%.

On a £270,000 purchase over 30 years at 5.55% with no deposit, monthly repayments would be £1,542 and total interest over the term would be £284,944, Compare the Market said. On a 5% deposit with a 5.28% rate, monthly payments would be £1,421 and total interest would be £255,122. It said that a £13,500 deposit could reduce total interest by £29,822 over the term, based on those assumptions.

Compare the Market said a deposit can reduce monthly payments and provides equity from the outset, but added that some first-time buyers may not be able to save a deposit even as small as 5%. It said zero-deposit mortgages can offer a route to homeownership for borrowers who cannot raise upfront funds, enabling them to build equity through repayments.

“The rise in zero-deposit mortgages is symptomatic of a market in which many buyers are finding it increasingly difficult to save, as rents, household bills and everyday costs continue to eat into disposable income,” said Charlie Evans (pictured right), money expert at Compare the Market.

“First-time buyers are turning to 100% mortgage loans as a way onto the property ladder – particularly in regions like the North West and South West where demand was strongest last year. Greater product availability and lenders cautiously re-entering this space may also be playing a role.

“While 100% mortgages can remove the upfront hurdle of a deposit, they often come with higher rates – and even a 5% deposit could help to save borrowers nearly £30,000 over the long term. As ever, it comes down to individual circumstances, so shopping around for a competitive deal is key.”

For David Hollingworth, associate director at mortgage broker L&C, no-deposit mortgages are one way lenders are trying to address the challenges faced by first-time buyers.

“Saving for a deposit is certainly not easy, especially alongside higher rents and cost of living,” he said. “The increased availability of mortgages for those with a small or no deposit can help to boost the chance of buying more quickly.

“If it is possible to get a deposit together, it will help to broaden the mortgage choices and improve the interest rates on offer. Typically, the bigger the deposit, the better the rates will be, which will make monthly payments more affordable.”

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