First-time buyers were relying on lower deposits last year that stretched their borrowing to the highest levels since before the financial crisis, according to the Office for National Statistics (ONS).
It said that, among people getting on the property ladder, the UK median average mortgage LTV (loan-to-value) ratio increased from 85.0% in 2024 to 85.6% in 2025.
The report said: “This was the highest level since before the financial crisis and reflects a return towards greater mortgage leverage after the lower ratios seen during the late 2000s and early 2010s.”
Across the UK there was a significant variation in the typical size of first-time buyer deposits being put down, with people in the North East of England putting down particularly small deposits as a percentage of the property value.
The North East recorded the highest first-time buyer LTV (loan-to-value) ratio in 2025 at 89.8%, the ONS said.
This was closely followed by Scotland (89.7%) and Wales (88.9%).
The report said: “London remained a clear outlier, with a first-time buyer LTV ratio of 80.2%, almost 10 percentage points below the highest regions.”
Higher house prices in London mean buyers are often required to find bigger deposits.
The report also said that first-time buyers accounted for more than half (52.8%) of mortgage sales in 2025, compared with around a third (33.8%) in 2006, “reflecting a substantial shift in the composition of the mortgage market”.
The figures were released at a time when households are dealing with rising fixed mortgage rates.
According to financial information website Moneyfacts, the average five-year fixed rate homeowner mortgage on the market on Friday was at its highest since October 2023.
The average five-year fixed homeowner mortgage rate on Friday morning was 5.88%, up from 5.87% on Thursday.
The Bank of England base rate was kept at 3.75% on Thursday, but several lenders have hiked fixed mortgage rates in recent weeks amid rises in swap rates, which are used to price mortgages.
Ian Futcher, financial planner at wealth manager Quilter, said first-time buyers are “having to stretch further to get on to the property ladder”.
He said: “The median loan-to-value ratio for first-time buyers reached 85.6% in 2025, its highest level since before the financial crisis, indicating buyers are borrowing a larger proportion of a property’s value and relying on smaller deposits.
“The deposit hurdle remains high, so many buyers are compensating by borrowing more of the purchase price.
“However, it is important to remember that these figures reflect conditions in 2025, when inflation was easing and mortgage affordability was gradually improving.
“The environment in 2026 has been more uncertain, with geopolitical tensions creating volatility in financial markets and mortgage pricing.
“While the underlying desire to buy a home remains strong, many households are likely to remain cautious about major financial commitments until there is greater confidence over the direction of interest rates and the wider economic outlook.”
The ONS report said the average mortgage handed out last year equated to three and a half times the borrower’s income.
Borrowers were typically stretching their incomes further, compared with an average loan-to-income ratio of 3.3 in 2024, according to the UK statistics.
The ratio for first-time buyers was also slightly higher, rising from 3.5 to 3.6 over the same period.
Despite the latest increases, both loan-to-income measures remained below peaks recorded in 2022, the ONS said.
Aneisha Beveridge, research director at Connells Group, 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.”
