FCA data show the highest 90%-plus LTV share since 2008
The value of new mortgages with deposits below 10% rose 38% to £24.7 billion in the year to June 30. That compares with £17.9 billion a year earlier, according to analysis by TWM Solicitors of FCA mortgage lending statistics.
The value of mortgages with deposits below 5% more than doubled from £720 million, TWM said.
FCA data for the second quarter show mortgages above 90% loan-to-value made up 8.4% of gross advances. That was the highest share since the second quarter of 2008 and 1.4 percentage points above a year earlier. Total gross advances rose 31.7% year on year to £77.4 billion in the quarter.
Rob Clifford, chief executive of Stonebridge, cautioned against reading too much into a single quarter. He said the figures are "distorted as they are by occasional interventions and events." He pointed to April 2025 stamp duty changes as a distorting factor.
Lenders launch higher loan-to-value products
Lloyds Banking Group opened applications on May 18 for a first-time buyer mortgage with a £5,000 minimum deposit. The product covers homes up to £300,000, equal to a maximum loan-to-value of about 98%. It was announced with a 5.89% five-year fixed rate and is available through intermediaries and direct channels. Lloyds said it aims to provide an additional £500 million of first-time buyer lending over the next year.
Santander launched a 98% loan-to-value first-time buyer mortgage earlier in 2026. It requires a minimum deposit of £10,000 on a maximum purchase price of £500,000.
Julian Sampson, partner and head of lending at TWM, said lenders are responding with "a much broader range of low-deposit products." He said younger buyers are increasingly choosing low-deposit mortgages because the cost-of-living crisis has made saving a deposit harder.
TWM also cited family deposit mortgages, in which a relative places 10% of the property value in a designated savings account for a set period. The cash acts as security, allowing the buyer to purchase with no deposit, TWM said.
The Home Builders Federation's Deposit Unlock scheme, which allowed new-build purchases with a 5% deposit, closed to new completions in April 2026. The federation said lenders will honour outstanding mortgage offers.
Guarantee scheme and FCA review
HM Treasury launched a permanent Mortgage Guarantee Scheme in July 2025. The scheme insures participating lenders against a portion of losses on mortgages of 91% to 95% loan-to-value, the department says. TWM said the guarantee covers losses of up to 14.25% of a property's value.
The FCA published consultation paper CP26/18 on June 9, proposing changes to help first-time buyers and other underserved borrowers. The proposals cover interest-only lending, variable or irregular income, credit-impaired borrowers, bridging loans and other areas. The FCA said they keep responsible lending requirements in place.
The consultation has closed, and the regulator expects to issue a policy statement in the second half of 2026. The FCA has said post-crisis reforms may have made it harder for some creditworthy borrowers to access a mortgage. TWM said the regulator has encouraged lenders to widen access.
Conditions and costs
Sampson said borrowers should understand the conditions attached to each product. Some schemes require family members to provide security, while others apply only to new-build homes or carry eligibility rules, he said.
He said borrowing a higher proportion of a property's value usually carries higher interest rates. That can mean higher monthly repayments, slower equity building and greater negative equity risk if house prices fall, he said.
The FCA said the share of advances above 75% loan-to-value rose to 47.5%, the highest since the fourth quarter of 2007. The proportion of mortgage balances in arrears was 1.1%, unchanged from the previous quarter.
TWM Solicitors is a Surrey law firm with specialist expertise in property and property finance.
