Low-Deposit Mortgages at 17-Year Peak: What It Means for UK Homebuyers
Friday 27 June, 2025
There’s encouraging news for UK homebuyers, especially first-time buyers, as the number of low-deposit mortgage deals has soared to a level not seen in nearly two decades. This uptick is a welcome development for those with smaller savings looking to take their first step onto the property ladder.
A Boost in 5% Deposit Mortgages
Figures from Moneyfacts show a sharp rise in the number of mortgages available at 95% loan-to-value (LTV). As of February 2025, there are 442 products on the market, the highest since March 2008. This reflects a notable recovery in mortgage lending and increases opportunities for buyers with only a 5% deposit to contribute.
The broader market has also grown significantly, with a huge number of mortgage products currently available, the most seen since February 2008. This increase highlights growing competition among lenders and renewed confidence across the sector.
What’s Behind the Surge?
Several forces are fuelling this expansion in low-deposit deals. Lenders are battling for business by cutting rates and softening lending requirements. Recently, banks such as HSBC and the Co-operative Bank have reduced interest rates, while Halifax and Lloyds have adjusted their affordability checks to allow for larger borrowing amounts.
In addition, the Financial Conduct Authority (FCA) has urged lenders to take a more flexible approach by reviewing overly strict criteria. The aim is to encourage responsible lending that remains accessible, striking a balance between caution and inclusion.
Impact on the Housing Market
This increased access to low-deposit products could stimulate the housing market, especially at the entry level. First-time buyers stand to benefit most, as more accessible mortgage options could lead to greater demand for starter homes. However, it will be important to maintain a close watch on market trends to avoid unsustainable growth or inflated property values.
Check the Fine Print
Despite the positive developments, borrowers should approach these deals with care. Some lenders attach conditions to low-deposit products, such as excluding newly built homes or requiring stronger credit histories. Buyers should always read the full terms and ensure they fully understand what’s required.
Why Mortgage Advice Matters
With so many products now available, it’s easy to feel overwhelmed, especially for those navigating the process for the first time. This is where expert advice makes a real difference. Working with a mortgage broker or adviser can help buyers identify the most appropriate deal for their personal and financial situation, avoiding potential pitfalls and making well-informed choices.
At Thomas Oliver, our knowledgeable mortgage advisers offer clear, personalised guidance at every stage of the home-buying journey. We know how important this milestone is, and we’re here to support you from first enquiry to moving day.
Sergiu Moldovan, Mortgage Broker & Protection Adviser in Harlow, Essex & Grays, Kent said:
“With the recent rise in low-deposit mortgage options, it really signals a welcome change in the UK property market and is opening the door once again for those hoping to buy their first home. With the help of professional mortgage advice from Thomas Oliver and our up-to-date market knowledge, buyers can move forward confidently and take meaningful steps towards owning a home.”
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
Sources: bbc.co.uk, moneyfactsgroup.co.uk, theguardian.com, moneyfactscompare.co.uk, financialreporter.co.uk, peak.htm
Approved by The Openwork Partnership on 20/06/2025.
