Low deposit mortgage lending grows 38% to £24.7bn

The value of new mortgages with deposits of less than 10% of a property’s value increased by 38% to £24.7bn in the year to 30th June 2026, up from £17.9bn the previous year, according to analysis by TWM Solicitors.
 
The value of new mortgages where the deposit is less than 5% of the property value more than doubled over the same period to £1.5bn, up from £720m.

TWM calculated the figures from the FCA's latest mortgage lending statistics, analysing the total value of mortgage advances by year and the share of them with an LTV above 90%.

The FCA recently launched a consultation on changes to help first-time buyers and other unserved borrowers access mortgages more easily. The FCA acknowledged that post-financial crisis reforms may "have made it harder for some creditworthy consumers to access a mortgage".

Some banks are offering mortgages covering up to 98% of the house price, while a number of lenders offer mortgages that require a deposit of just £5,000.

Other mortgage innovations include family deposit mortgages, where a family member puts 10% of the property value into a designated savings account for a set period. This cash is used as security and allows the purchaser to buy with no deposit.

Another product allows buyers of new-build homes to purchase with just a 5% deposit, with the housebuilder guaranteeing lenders against losses of up to 35% of the property’s value.

Separately, the government introduced a new scheme in July 2025 that provides lenders with a guarantee against losses of up to 14.25% of the property’s value on mortgages covering between 91% and 95% of that value.

Low-deposit mortgages were popular before the Global Financial Crisis. In Q2 2007, 15% of new mortgages in the UK had an LTV ratio of 90% or more of the property price, versus 8.4% today.

Julian Sampson, partner and head of lending at TWM Solicitors, commented: “After several years in which higher interest rates and rising living costs made it increasingly difficult for first-time buyers to save a meaningful deposit, we're now seeing lenders respond with a much broader range of low-deposit products.

"The regulator has encouraged lenders to widen access to mortgages, and banks have responded by creating more innovative mortgage products.

"Many buyers who previously found themselves excluded from the market now have more routes into home ownership than they would have had just a few years ago. What is rewarding are the number of conversations we are having with lenders’ product teams who are taking active decisions to structure their mortgage products with this one aim in mind. The consumer lending market is bubbling with intent.

“There is substantial deferred demand for mortgages amongst young people – low deposit mortgages are opening up home ownership to many of those buyers.

"While these products can open the door to home ownership, buyers should make sure they understand the conditions attached. Some schemes involve family members providing security, others are restricted to new-build properties or have eligibility requirements that borrowers need to consider carefully.

"Although low-deposit mortgages can make home ownership possible much sooner, buyers should remember that borrowing a higher proportion of the property's value usually comes with higher interest rates. That means monthly repayments may be higher and it can take longer to build equity, increasing the risk of negative equity if house prices fall."