An in-depth analysis of mortgage affordability by Acre has revealed widening regional disparities and mounting pressures on first-time buyers, despite an apparent increase in lending appetite from banks and building societies.
The brokerage platform, which handles over 2.8 million affordability requests per month, analysed more than 14 million affordability searches and results from the first half of 2025.
Its findings offer a detailed snapshot of how borrowers – especially those entering the housing market for the first time – are faring against the backdrop of rising prices and tighter affordability conditions.
Average loan sizes for first-time buyers have risen by 5% year on year, climbing from £227,717 in 2024 to £240,299 in 2025. However, this growth is not keeping pace with house prices, which rose 6.7% in the year to May, according to the Office for National Statistics.
As a result, average loan-to-value (LTV) ratios are slipping, and borrowers are having to stretch further to secure properties, particularly in certain pockets of the UK.
Acre’s data points to a growing divergence between the loans buyers are requesting and those they are being offered. In the last three months, lenders have offered first-time buyers an average maximum loan size 1.57 times greater than requested, up from 1.49x earlier in the year – a shift that suggests lenders are more willing to support higher borrowing.
Yet, affordability remains a serious challenge. Justus Brown, chief executive and founder of Acre, said: “Our findings lay out the crippling affordability challenges faced by many first-time buyers, being forced to borrow more, particularly in areas with a strong jobs market and in emerging expensive rural locations.
“Brokers are constantly navigating these choppy affordability waters for their clients, equipped with the responsibility of securing the best-suited mortgage without putting any undue pressure on them.”
Shared ownership appears to offer some relief: buyers using this route are borrowing an average of £111,890, with a more modest loan-to-income (LTI) ratio of 2.46x. This compares favourably to the 3.40x average for standard borrowing.
REGIONAL DIFFERENCES
Regionally, the data highlights pronounced differences. London and the South East continue to show the highest LTIs, averaging 3.65x. In some outer London postcodes – notably Southall (UB), Enfield (EN), Croydon (CR), Bromley (BR), and Sutton & Morden (SM) – the ratio is even more stretched, with UB peaking at 4.16x. Average loans in these areas exceed £250,000, well above the England average of £189,000.
Surprisingly, rural and small-town areas such as Harrogate, Wick and Orkney, Falkirk, and Shrewsbury and Powys are emerging as affordability flashpoints. In these locations, buyers are required to borrow heavily relative to income, often outpacing nearby towns and cities.
Conversely, northern England paints a more cautious picture. FTBs here typically borrow at lower LTI levels, with most areas – excluding Cumbria and Newcastle – remaining below the 3x threshold.
In the Midlands and the South (outside Greater London), the picture is more mixed, with some affordability pressure showing through but fewer extreme spikes.
Scotland stands out for its relatively low LTI ratio of 2.86x, yet borrowers there are taking on a high share of property value, with average LTVs around 82% and an average loan size of £167,508.
Welsh borrowers show similar characteristics, borrowing 82.2% of the property value on average, with loans typically around £180,013.
REMORTGAGE PICTURE
Beyond the first-time buyer segment, remortgaging activity reveals further contrasts. Repayment mortgage seekers are enjoying wide product availability – an average of 10.3 lenders per case – and generous affordability terms, with average offers amounting to 180% of the requested loan amount.
However, interest-only borrowers are raising flags. The average loan size among this group now stands at £343,000, far higher than the £238,000 average for repayment remortgages. This suggests a cohort of homeowners may be increasingly overextended, leaning on interest-only products to manage cashflow in the face of higher rates and tighter budgets.
