Low-Deposit Mortgages Reach Record Levels for First-Time Buyers

First-time buyers in the UK now have access to the largest selection of low-deposit mortgages in nearly two decades, according to data from financial research firm Moneyfacts. At the start of February, 537 mortgage deals were available allowing buyers to borrow 95% of a property's value — meaning a buyer only needs to save a 5% deposit to qualify. That is almost double the 274 deals available in February 2024, and the highest number since March 2008. For buyers with a 10% deposit, competition among lenders is even fiercer, with a record 981 deals now available.

Some lenders are going further still. Santander launched a product in early February 2026 allowing first-time buyers to borrow up to 98% of a property's value with a deposit of as little as £10,000. Skipton and Yorkshire building societies offer deals permitting borrowers to access up to 100% and 99% of a property's value respectively, though restrictions apply on who can apply and which properties are eligible.

What Is Driving the Expansion

The growth in low-deposit lending reflects both improved lender confidence and deliberate competition to bring first-time buyers back into the market. Lenders have recognised that saving a deposit, not earning enough income, is the primary barrier keeping people from buying. Product innovation is responding to that reality.

Borrowing conditions are also improving more broadly. Lenders have relaxed their affordability rules, and expectations of further cuts to the Bank of England base rate are making mortgages cheaper over time. The average rate secured by a first-time buyer in January 2026 was 4.41%, down from 4.86% a year earlier. On a £200,000 mortgage repaid over 30 years, that reduction saves a buyer roughly £3,240 over a five-year fixed term. Two- and five-year fixed-rate deals for buyers borrowing 95% of a property's value currently start at approximately 4.47% and 4.53% respectively.

The generational picture is also shifting. In December 2025, 22% of first-time buyers purchased homes with deposits under £20,000, up from 13% a year earlier. Confidence among 18 to 34-year-olds in the UK housing market rose from 33% in January to 40% in December 2025, with younger adults more than twice as likely as the national average to aim to buy a home in 2026. First-time buyers now account for over a third of all property purchases in the UK, more than double their share a decade ago.

The Awareness Gap

Despite the headline figures, access to these deals remains uneven, largely because many buyers do not know they exist. Research from the Building Societies Association found that 47% of people who want to buy a home had never spoken to a lender or mortgage broker to explore their options. When shown the deals actually available, two-thirds said they could buy sooner than they had assumed. The barrier, often, is not financial. It is informational.

It is also worth understanding who these products are actually serving. Not all first-time buyers face the same challenge. A significant share already hold large deposits, often supported by family wealth, and are not dependent on 95% or 98% mortgage products. The buyers genuinely unlocked by the current wave of lender competition are a more specific group: independent savers without family capital, typically targeting lower and mid-price point properties. That distinction matters when assessing where demand is building and why.

What This Means for First-Time Buyers

The range of deals now available signals that getting onto the property ladder is more achievable than many people assume. That said, higher loan-to-value products, those where a buyer borrows most of the property's value, tend to come with tighter eligibility criteria, restrictions on property types, and less flexibility down the line. Buyers who take time to understand their options, work with a broker, and prepare their finances carefully are best placed to benefit from the current environment.

What This Means for Investors

At PariVest, we track these trends because they reveal where buyer demand is building and how the broader shift from renting to owning is taking shape in the UK market. The expansion of low-deposit lending is not lifting all first-time buyers equally. It is unlocking a specific segment: independent savers without family backing, typically purchasing at lower and mid-price points. This is where the structural shift in demand is most meaningful, and where the knock-on effects for property values, rental demand, and market activity are likely to be most pronounced.