Are we back at the old risk frontier, or has first-time buyer lending simply caught up?
The return of ultra-low deposit lending is stirring an uneasy familiarity in parts of the mortgage market, even as lenders insist today’s underwriting bears little resemblance to the excesses of the past.
“Just when the industry settled into a narrative of restraint, the dial is turning again,” said Lee Gathercole (pictured top), founder and mortgage advisor at Rebus Financial Services. “Zero deposit mortgages.”
Products requiring little to no upfront cash — including minimum deposits as low as £5,000 — are re-emerging at a time when many first-time buyers remain trapped by high rents and slow-moving wages. Supporters argue the shift reflects a changed reality: would-be buyers with strong incomes, stable employment and good credit histories are often unable to accumulate deposits quickly enough to keep pace with house prices.
Gathercole’s argument is that the market has spent years treating deposits as a proxy for affordability, while ignoring the more immediate constraint on many households: liquidity. “For many first-time buyers, affordability has not been the core problem,” he stressed.
He points to the gap between what borrowers can service each month and what they can save while renting. “Rent at £1,400 a month is affordability,” he said. “Paying someone else’s mortgage for five years is affordability.”
In that context, small-deposit and zero-deposit deals are framed less as an invitation to overreach than as an attempt to shorten the time between readiness and ownership. “The real barrier has been liquidity, not income,” Gathercole argued. “A £5,000 entry point doesn’t remove risk. It removes delay.”
The more controversial strand is not the deposit level, but the stretching of income multiples. Offers at up to six times income have begun to appear in certain segments, raising questions about whether the industry is relaxing discipline at the wrong moment — particularly with interest rates no longer at emergency lows and household budgets still under pressure.
Gathercole acknowledges the discomfort the headline figure provokes. “The six-times-income headline will make some uncomfortable,” said he said. “It should.”
Yet he argues that fixed caps can also become distortive when property values run ahead of wages for extended periods, particularly for borrowers with predictable career progression and dual incomes. “The question isn’t whether ‘six-times’ is dangerous, the question is whether 4.5 times has become outdated in certain segments,” Gathercole pointed out.
For lenders, the case rests on the claim that the market is not broadly loosening, but selectively targeting borrowers who meet tougher standards. “This is not 2007 lending,” Gathercole said. “Credit scoring is deeper, stress testing is stronger, and regulation is tighter.”
The distinction matters for brokers advising clients who may see the return of 0% deposit products as a sign that caution is no longer required. Gathercole’s view is that underwriting has evolved, but messaging has not always kept pace. “The market isn’t loose, it’s targeted,” he said, arguing that lenders are “selectively widening the door for borrowers who demonstrate resilience.”
Even so, the risk may sit less with product design than with public interpretation. “Headlines travel faster than nuance,” he added. “Zero percent mortgage can easily be interpreted as ‘no skin in the game’.”
That misreading can be compounded where borrowers focus on maximum borrowing rather than long-term affordability under stress. “Six-times-income can be mistaken for ‘borrow as much as you possibly can’,” Gathercole said. “These products are tools. Powerful ones. But tools still require judgement.”
For mortgage professionals, the immediate practical question is how to assess suitability in a more complex landscape. Low-deposit deals and higher income multiples may improve access for a cohort that has been shut out despite strong payment histories in the rental sector. At the same time, the margin for error is narrower if rates rise again, if income is disrupted, or if property prices soften.
Gathercole’s warning is that the industry needs to hold two ideas at once: that some constraints have become misaligned with today’s housing costs, and that easing them without careful advice could store up problems. “Zero deposit today is not zero scrutiny,” he said, while cautioning that “without structured advice, buyers risk overextending in an environment where rates are no longer ultra-low and economic volatility hasn’t disappeared.”
The shift, then, is best understood as a targeted recalibration rather than a return to blanket risk-taking — but one that will test brokers’ ability to keep clients grounded when product headlines suggest the opposite.
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