First-time buyers are once again front and centre as policymakers, regulators, and lenders grapple with how best to support them onto the first rung of the housing ladder.
For lenders in particular, this borrower demographic represents a strategic priority and, accessed correctly, should always present a real business opportunity. These borrowers are typically early in their financial journeys, yet they are often highly engaged, brand-loyal, and have strong lifetime value potential. Supporting them isn’t just good economics, it’s a commercial imperative.
Yet the structural challenges these buyers face remain profound. According to recent data from Savills, 52% of first-time buyers in 2024 received financial help averaging over £55,000. That illustrates the growing reliance on family support to bridge affordability gaps, but it also means nearly half of all first-time buyers are trying to step onto the ladder without such assistance. For these customers, the deposit hurdle looms large, especially against a backdrop of high rents and inflation.
This is where high LTV mortgages are critical. They offer lenders a route to serve financially sound, credit-worthy borrowers who are blocked not by their monthly affordability, but by upfront capital requirements. At a time when demand is constrained and growth opportunities are increasingly tied to niche segments, this is a cohort lenders cannot afford to ignore.
Market trends are encouraging. The number of 95% LTV products has continued to inch up month-on-month, reflecting renewed appetite from lenders to support this demographic. This is a sign of a maturing market recognising the need for inclusivity, backed by prudent underwriting and risk management. For lenders, these products enable diversification, support portfolio growth, and contribute to wider market liquidity.
That said, product innovation alone isn’t enough. The regulatory framework also plays a pivotal role in shaping lender behaviour. Current Bank of England rules still limit the proportion of lending above 4.5 times income. While these caps are designed to maintain systemic resilience, they can have the unintended consequence of excluding viable borrowers, especially in high-cost regions where house price-to-income ratios are severely out of sync.
Savills recently estimated that easing these constraints could lead to a 14% to 24% uplift in first-time buyer transactions over the next five years. This equates to 47,000 to 80,000 additional completions, which would have a direct and positive impact on lender pipelines.
However, without a corresponding increase in housing supply, the risk is that additional borrowing power merely inflates prices further. The opportunity here is not just for lenders to expand access, but to do so in a way that is targeted, risk-sensitive, and economically rational.
Encouragingly, regulators appear receptive to these concerns albeit set against a backdrop of some confusion about its commitment to advice.
The FCA’s, Director -Retail Banking, Emad Aladhal recently highlighted the need to reassess mortgage regulation to ensure it facilitates, rather than frustrates, access to homeownership. This of course should not be about watering down risk controls, but about modernising the approach to reflect today’s market conditions and borrower profiles. For lenders, this opens the door to advocate for reforms that balance access and responsibility.
What does this mean in practice? It means designing high LTV products that are tightly aligned with borrower affordability. It means leveraging data and analytics to assess risk with greater precision. And it means using credit protections and insurance structures where appropriate to manage exposure without constraining lending ambition. There is an opportunity here for lenders to lead the market, differentiate their offerings, and align with the regulatory direction of travel.
High LTV lending, done right, is not a compromise on quality. It is a strategy for sustainable growth, for customer acquisition, and for meeting an urgent social need. First-time buyers without family support are not high-risk borrowers; they are simply underserved. With thoughtful product design and sound governance, lenders can unlock new volumes while staying well within risk appetites.
The months ahead are likely to be shaped by shifting rate expectations, political signals around homeownership, and evolving borrower sentiment. But throughout this, one thing remains constant: the need for solutions that support financially viable first-time buyers. Lenders who get ahead of this will be well-positioned to grow, to build long-term relationships, and to strengthen their reputations for responsible innovation.
