Mortgage lending at loan-to-value ratios above 90% rose sharply over the past year as lenders expanded the range of products available to buyers with smaller deposits, analysis from TWM Solicitors shows.

The value of new mortgages requiring a deposit of less than 10% reached £24.7 billion in the year to 30 June 2026, compared with £17.9 billion during the previous 12 months — an increase of 38%.

Growth was particularly strong at the highest loan-to-value end of the market. New lending where borrowers provided deposits of less than 5% more than doubled from £720 million to £1.5 billion, according to TWM’s analysis of FCA Mortgage Lending Statistics.

The figures come as lenders continue to develop products aimed at first-time buyers and other borrowers who have struggled to accumulate larger deposits amid higher living costs.

LENDERS EXPAND HIGH-LTV OPTIONS

Julian Sampson, partner and head of lending at TWM Solicitors, says: “After several years in which higher interest rates and rising living costs made it increasingly difficult for first-time buyers to save a meaningful deposit, we’re now seeing lenders respond with a much broader range of low-deposit products.”

He adds: “The regulator has encouraged lenders to widen access to mortgages, and banks have responded by creating more innovative mortgage products.”

“Many buyers who previously found themselves excluded from the market now have more routes into home ownership than they would have had just a few years ago.

“What is rewarding are the number of conversations we are having with lenders’ product teams who are taking active decisions to structure their mortgage products with this one aim in mind.

“The consumer lending market is bubbling with intent.”

Sampson says: “There is substantial deferred demand for mortgages amongst young people – low deposit mortgages are opening up home ownership to many of those buyers.”

Products currently available in the market include mortgages offering lending of up to 98% of a property’s value, while some lenders have introduced products requiring a deposit of £5,000.

Other approaches include family deposit mortgages, under which a relative places 10% of the property’s value into a savings account for a specified period. The savings provide security for the lender and can allow the purchaser to buy without providing their own deposit.

There are also schemes for new-build properties where purchasers provide a 5% deposit and the housebuilder offers the lender protection against a proportion of potential losses.

REGULATORY CHANGES

The expansion of higher-LTV lending comes alongside regulatory efforts to widen mortgage access. The FCA has launched a consultation on proposed changes intended to help first-time buyers and underserved borrowers, acknowledging that reforms introduced after the global financial crisis may have made mortgages harder to obtain for some creditworthy consumers.

The government also introduced its permanent Mortgage Guarantee Scheme in July 2025, providing participating lenders with a guarantee covering part of their potential losses on mortgages with loan-to-value ratios between 91% and 95%.

Despite the recent growth, high-LTV lending remains below levels recorded before the global financial crisis. Mortgages at 90% LTV or above accounted for 15% of new UK mortgages in the quarter to 30 June 2007, compared with 8.4% today, according to the FCA figures cited by TWM.

Sampson says: “While these products can open the door to home ownership, buyers should make sure they understand the conditions attached. Some schemes involve family members providing security, others are restricted to new-build properties or have eligibility requirements that borrowers need to consider carefully.”

He adds: “Although low-deposit mortgages can make home ownership possible much sooner, buyers should remember that borrowing a higher proportion of the property’s value usually comes with higher interest rates.

“That means monthly repayments may be higher and it can take longer to build equity, increasing the risk of negative equity if house prices fall.”