The number of first-time buyer mortgages advanced at 4.5 times income or more rose by two thirds in 2025, with particularly sharp growth in lending above 5.5 times income, FCA figures show.

Data obtained from the Financial Conduct Authority through a Freedom of Information request by money app Plum shows 45,800 first-time buyer mortgages were advanced at loan-to-income ratios of at least 4.5 times salary last year, compared with 27,500 in 2024.

That represented an increase of 66%, while lending at the highest income multiples grew considerably faster.

The number of first-time buyer mortgages at 5.5 times salary or more increased from 420 in 2024 to 4,628 in 2025, a more than tenfold rise.

The figures follow changes to the framework governing high loan-to-income lending. In July 2025, the Bank of England’s Financial Policy Committee recommended allowing individual lenders greater scope to exceed the previous limit under which mortgages at or above 4.5 times income were generally restricted to 15% of new lending.

As an interim measure, lenders were invited to apply for permission to increase their higher loan-to-income lending while a consultation took place.

Rajan Lakhani, personal finance specialist at Plum, said: “Traditionally banks loaned four to four and a half times a first-time buyer’s income. But the loosening of lending rules means some lenders have offered loans of up to seven times their salaries if they meet certain criteria including high income and excellent credit scores.

“While the shake-up has been positive in allowing first-time buyers to get on the housing ladder quicker, there are different strategies out there for buyers who don’t want to take on more debt than they have to.

“Building a deposit through a Lifetime ISA can mean you borrow less, and mitigate exposure to any jump in interest rates later on.

“It also offers the unique appeal of free money, the exact opposite of a mortgage lender, which charges you interest on every penny.”

FIRST-TIME BUYER ACTIVITY RISES

The FCA figures also point to a broader increase in first-time buyer mortgage activity. The total number of loans increased by 16%, from 327,001 in 2024 to 380,716 last year.

Mortgages based on a single income rose 17%, from 149,191 to 174,769, while joint-income lending increased 16%, from 177,808 to 205,947.

The largest group of borrowers remained those taking mortgages of between 3.5 and 4.5 times income. There were 160,928 loans in this band, accounting for 42.3% of the total.

A further 113,478 mortgages, or 29.8%, were between 2.5 and 3.5 times income, while 60,440, or 15.9%, were below 2.5 times income.

There were 41,175 mortgages between 4.5 and 5.5 times income, representing 10.8% of first-time buyer lending. Another 4,501 loans were between 5.5 and 6.5 times income and 127 were above 6.5 times income.

DEPOSIT SIZE

Plum argued that first-time buyers should weigh the ability to borrow at higher income multiples against the potential benefits of building a larger deposit, including access to lower mortgage rates.

Lakhani said: “The urgency to get on the housing ladder means first-time buyers are borrowing more, when ideally they would be trying to save more as well.

“A bigger deposit is often a greater weapon in the long-term than a bigger loan. For a start, the process of qualifying for a loan is often quicker for those with greater savings, and the cost of repaying the loan is usually cheaper.

“Having a bigger chunk of money saved usually means you can unlock lower interest rates and make considerable monthly savings.

“For example, a buyer with a 20% deposit on an average first-time buyer home is likely to save £132 monthly compared to someone with a 10% deposit based on a price of £225,525 and interest rates of 5.06%.

“A Lifetime ISA, with its 25% government bonus, is designed precisely to help people get there without taking on income multiples they may later regret.”

Lifetime ISAs allow eligible savers to contribute up to £4,000 a year, with the government adding a 25% bonus of up to £1,000 annually. The accounts can be used towards the purchase of a first home or for later-life saving, subject to the scheme’s rules.