Growing deposit sizes are testing family finances, but new low-deposit products are offering alternative routes onto the ladder
The average first-time buyer is now putting down close to £70,000 to purchase a home, equivalent to 20.7% of a typical purchase price of more than £305,000, according to new figures from L&C Mortgages.
David Hollingworth (pictured top), associate director at L&C Mortgages, told Mortgage Introducer the scale of deposits being assembled makes clear that parental support remains the dominant route into homeownership, and that the pressure on families is growing.
"Sadly, I think it clearly suggests that for most people to get that kind of amount together, you'd very much expect that there's some help, probably from parents," he said. "I think still we tend to see the most common help be in the form of a gift from parents. But over time, those amounts get bigger, and that only gets harder for the bank of mum and dad to be able to help to the kind of tune that they're having to, particularly where you've got not just one child but siblings as well."
With deposits at this level, even grandparents are being drawn into the equation. "That's where I think you also get more talk of will grandparents potentially be gifting money towards first-time buyers' property purchase," Hollingworth said. "I haven't got any clear data on that, but I think you do start to see examples of that anecdotally, and you can understand why when the figures are so substantial."
What is driving the falling deposit share?
There is a more positive signal in the L&C data. The deposit-to-price ratio has fallen from more than 24% in 2023 to 20.7% in 2026, suggesting buyers are not having to lean on family wealth quite as heavily as before. Hollingworth attributed this to two reinforcing trends – lenders expanding the range of products available to those with smaller deposits, and some increasing the income multiples at which they are prepared to lend.
"Often those two things are intertwined," he said. "If you go back when the percentage of the purchase price that people were putting down was even more significant, that was probably out of necessity. Now, if you can borrow more, that should help to improve the options open to the first-time buyer. But also, more recently, we've seen a lot more lenders looking to bolster the options available to those with smaller deposits."
The product range has expanded markedly in recent months. Low-deposit mortgage availability has reached its widest point since 2008, with lenders including Skipton Building Society offering products requiring no deposit at all through its Track Record Mortgage. Hollingworth confirmed that £5,000 minimum deposit products are now increasingly common alongside 98% and 99% loan-to-value (LTV) deals.
Who do low-deposit products suit – and who should think carefully?
Hollingworth is clear that high LTV products are not a universal solution, and that brokers have a central role in distinguishing which clients they genuinely serve.
"The people that really are suited are those who have got good income, good affordability, but they're perhaps in rented accommodation, they're paying high rents, they're trying to save towards a deposit," he said. "Not everyone will have the help of parents available to them, so they may be in a good position to get a mortgage, but they may not be able to save a big enough deposit as quickly as they would like. Those kind of 98–99% deals, or 100%, for that type of borrower, I think they could really open the door to buying a lot sooner."
Negative equity is a genuine risk at high LTV ratios, but Hollingworth argued it is often misread. "If you've got a smaller amount of equity in the property, there is a higher chance that a drop in prices could leave you owing more than the value of the property," he said. "But arguably that's also true if you've got a 5% deposit, or even bigger than that." The risks and trade-offs of high LTV borrowing for first-time buyers have become a live discussion across the broker community as the product range has widened.
Most low-deposit products are structured as five-year fixed rates, which Hollingworth said gives borrowers a meaningful degree of protection. "They're not going to be subject to up and down as interest rates shift over that five-year period," he said. "And assuming that they'll meet those mortgage payments, they'll have paid down some of that mortgage by the end of the five years. And fingers crossed, the property's gone up in value."
Affordability remains the central advisory conversation
Brokers advising buyers at the lower end of the deposit scale will find the conversation consistently returns to the question of whether the monthly payments are genuinely manageable.
"It all kind of hinges on affordability, and that clearly is a big part of the discussion that advisers are having," Hollingworth said. "Can you afford to borrow the mortgage? What do the monthly payments look like? Does that give enough stability to the borrower so they can ride out any fluctuation in property value?"
Buyers weighing up low-deposit options tend to have a clear frame of reference when making the decision. "When they look at the alternative situation where they may still be in rented accommodation, they would rather still see that there's a benefit to them to buy – potentially even be paying less on a mortgage – but they're happy to take on the chances that property prices will fluctuate over time."
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