Everyone agrees it’s a tough time to be a first-time buyer in the UK. It’s hard to save for a deposit, and it’s hard to borrow enough to afford the rest of a house.
But according to an article published by BBC News last week, things might be looking up. In real terms, house prices have fallen. The mortgage market and mortgage regulation are adapting to offer products that help first-time buyers.
The loan-to-income (LTI) cap has been relaxed, allowing banks to make more loans above 4.5 times a borrower’s income. There has also been a proliferation of products that allow borrowers to put down a smaller deposit.
Skipton Building Society began offering the first 100% LTV mortgages back in 2023. Plenty of others have joined them since. Earlier this month, Gable Group announced a £250m funding line that will allow it to join the fray.
Tom Hall gets into how all this high LTV lending works from the risk management and funding side on this week’s podcast. In short, high LTV mortgages come with high capital charges for banks, so securitization has an important part to play in distributing risk.
But are more high LTV products going to unleash a wave of demand from first-time buyers?
According to the BBC News report, average house prices are now 7.6 times average incomes. That suggests affordability is the binding constraint.
Suppose a borrower can afford a mortgage of five times their salary, slightly above the old 4.5 times LTI cap. They’d still need a deposit of 2.6 times their annual income, or 34% of the property value. At 66% LTV, there is a wide range of products available.
Indeed, high LTV lending has hardly come to dominate the market, though it is on the rise. That suggests there are marginal cases where high LTV borrowing does open up home ownership for new borrowers, and securitizations are helping make that happen.
According to FCA figures, in Q1 this year 0.53% of the residential mortgage loans had an LTV of 95% or more. That is up from 0.24% in Q1 2025 and 0.19% in Q1 2022. There’s a similar trend for 90% to 95% LTV lending, which was 7.5% of the market in Q1 2026, up from 6.43% in Q1 2025 and 3.76% in Q1 2022.
Also on the podcast this week, Thomas Hopkins explains why CLOs are the only sector of the capital markets that won’t take a summer holiday. According to GlobalCapital’s Asset Backed Monitor, 21 CLOs have priced in August, and one July deal was upsized post-pricing. Read all about that here and listen to our podcast on Buzzsprout here.
