New research from Armalytix reveals the growing financial pressures facing UK first-time buyers (FTBs). The data shows that half of all FTBs are taking out mortgages at 90% loan-to-value (LTV) or higher, with 1 in 7 stretching to 95%+ LTV now they are available. By contrast, only 22.6% of repeat buyers take on mortgages above 90%, highlighting a two-tier market where FTBs face the greatest risk.
Family contributions remain a key factor in FTBs’ ability to get on the property ladder. Armalytix found that 25% of high-LTV first time buyers received a family gift, typically around £10,000, which is often too small to move them into a lower LTV bracket or unlock better mortgage rates. In comparison, among lower-LTV first-time buyers, 36% received a gift of around £30,000, giving them a tangible advantage in securing better mortgage rates, and lower financial stress.
Mike Ward, Chairman at Armalytix, comments: “High LTV has become the new normal for first-time buyers. While government schemes like the Lifetime ISA or Help to Buy ISA certainly help, family gifts increasingly determine who can move forward and who remains stretched. Those with larger family backing move ahead, while others face higher costs and greater risk.”
Despite the availability of government schemes, uptake remains low. Based on the Armalytix data, only 32% of eligible FTBs used a government ISA this year. For most, family gifts, rather than government contributions, remain the defining factor in reducing borrowing.
Repeat buyers are less reliant on gifts overall, but when they do receive support, it has a bigger impact. The mean gift share of purchase for non-first-time buyers was 25.8%, compared with just 13.1% for FTBs, reflecting the advantages of equity recycling and wealth transfer.
Armalytix’s data underlines the wider challenges in the property market. With affordability stretched, first-time buyers are exposed to higher financial risks, and lenders and advisors need to understand these dynamics to better support clients.
“First-time buyers are navigating a high-pressure market with limited room for error,” adds Mike. “Understanding the role of family support, government schemes, and borrowing risks is crucial for anyone advising or lending in this market. Our analysis helps professionals make informed decisions quickly, reducing risk and improving outcomes for buyers.”
