First-time consumers turning into extra extremely leveraged

First-time consumers are leaning more durable on excessive loan-to-value mortgages, evaluation of UK Finance knowledge from HouzeCheck has revealed.

Within the first quarter of 2025 the typical LTV on a first-time purchaser mortgage rose to 77.1%, a rise from 74.7% in Q1 2024.

Richard Sexton, industrial director of HouzeCheck, stated: “The times of large fairness cushions are over – and they’re unlikely to return anytime quickly.

“First-time consumers are borrowing extra to finance property purchases. Some would argue that it’s an indication of confidence out there.

“I don’t suppose that’s the case: it’s an indication that potential first-time consumers dwelling in rented lodging can now not save for deposits.

“As landlords have left the market within the face of unhelpful regulation, the availability of rented property has shrunk, and rents have risen.

“There’s no sense that first-time consumers have hit a ceiling in how a lot they’ll stretch, both – have a look at the growing variety of zero deposit mortgages obtainable now.”

Common LTVs on first-time purchaser mortgages are a lot increased in Scotland, the place they rose to 82.4% in Q1 2025, up from 81.0% in Q1 2024.

Sexton added: “The typical LTV for a brand new first-time purchaser mortgage in Scotland is excessive, even in comparison with London. And it’s nonetheless rising.

“The issue is that consumers in Scotland haven’t been ready to avoid wasting for first rate deposits for longer as a result of the owner exodus began earlier there.

“Housing is a devolved matter and anti-landlord laws began earlier north of the border nudging up rents, limiting tenants’ potential to tuck cash away.

“First-time consumers in Scotland are more and more turning to excessive LTV mortgages to get a foothold on the property ladder.”

Common LTVs for first-time consumers are rising quickest in East Anglia (up from 73.6% in Q1 2024 to 76.2% in Q1 2025), the South East (up from 74.0% to 77.3%), and in Better London (from 67.1% to 72.0%).