Millions of potential first-time buyers now struggle to secure higher LTV finance
The average loan-to-value (LTV) ratio on mortgaged homes in the UK has dropped to 59%, down from about 70% in 2012, suggesting that borrowers are now less highly geared than a decade ago, according to the Intermediary Mortgage Lenders Association (IMLA).
In its new report, IMLA estimates that £677 billion of housing equity has accumulated across the UK housing stock since the financial crisis, driven by capital repayment and rising house prices. As of 2024, only around 42% of private homes are mortgaged, meaning the majority of properties are owned outright or have comparatively low borrowing secured against them.
IMLA said this downward shift in average LTVs has reduced many borrowers’ exposure to interest rate changes and helped to bolster the resilience of the housing market overall.
The association warned, however, that this relative strength among existing homeowners contrasts with the position of those trying to buy for the first time. Another IMLA report suggested that about 3.5 million potential first-time buyers who, in previous cycles, might have entered the market have yet to do so. Many are expected to need higher LTV products and other forms of innovation to secure a first purchase.
“The market has demonstrated resilience, but we cannot ignore the access gap,” said Kate Davies (pictured right), executive director at IMLA. “There is a generation of aspiring homeowners who will need higher loan-to-value options, creative solutions and flexible products to take their first step.
“Those products already exist and innovation is continuing, but standards must remain robust. Higher-LTV lending must sit within disciplined affordability testing to ensure borrowing is sustainable over the long term.”
Davies added that widening access is not only a matter of product design or risk appetite, but also of communication and advice.
“First-time buyers need clear information about the options available to them and support in navigating an increasingly complex market,” she said. “Professional advice plays a critical role in ensuring that those entering at higher LTV levels do so responsibly and with confidence.”
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.
