Owning their own home remains a cornerstone of dreams and aspirations of thousands of young people in the UK. But for a significant proportion, it feels increasingly out of reach.
Indeed, a recent report from Public First, a political and public affairs consultancy, commissioned by the Home Builders Federation (HBF) found that 90% of non-homeowners aged 20 to 44 lack the savings to afford a deposit – effectively blocking them from putting their foot on the first rung of the property market.
The report’s modelling focused on individuals and couples in this age group whose wealth, while sufficient to meet lender deposit requirements at a 90% loan-to-value (LTV) ratio for the average first-time buyer (FTB) property in their region, still fell short of bridging the gap to ownership. The HBF’s answer was to propose a new equity loan scheme for new-build homes to lower deposit barriers to around 5%.
The HBF’s suggestion of a new equity loan scheme for new homes is well-intentioned. But I think that misses the mark.
Relying on government-backed initiatives to prop up the market often shifts focus away from sustainable, market-driven answers. Instead of lobbying for additional public funding, the HBF and similar organisations would better serve aspiring homeowners by championing the low-deposit mortgage products already available. These offerings, tailored to the needs of young, responsible professionals, are proving to be a game-changer, and mortgage intermediaries play a critical role in connecting clients with these opportunities.
High LTV mortgages, including 97%, 99% and even 100% LTV options, have seen a resurgence recently. Contrary to alarmist views, this is not a repeat of the reckless lending practices associated with Northern Rock before the 2008 financial crisis.
Today’s high LTV products are designed with prudence in mind, targeting tenants who demonstrate financial responsibility but who struggle to save a substantial deposit amid rising rents and living costs. Lenders such as April Mortgages, Vida Homeloans, Gable Mortgages, Halifax, and Accord Mortgages are leading the charge, offering innovative solutions that balance risk and opportunity.
Vida Homeloan’s 3 & Easy mortgages, for instance, offer 97% LTV options and are available to those with complex or second job income and the self-employed and contractors. There is also a potential loan term of up to 45 years, helping borrowers with their affordability.
Accord Mortgages goes further with a 99% LTV mortgage that sweetens the deal with free standard valuation. It is available on loans from £95,001.
April Mortgages has introduced its No Deposit Mortgage, a 100% LTV product available on 10- and 15-year fixed terms. Not only does this help in the here and now, the interest rate falls automatically if the borrower pays down the loan, dropping into lower LTV bands.
Gable Mortgages has also entered the fray with two 0% deposit, five-year fixed products: a standard option at 6.29% and a new-build version at 5.99%, with loans up to £1 million.
And Halifax is offering the Family Boost mortgage. This guarantor-style product sees a family member put 10% of the purchase price of the property into a 3-year fixed term savings account as security. The family member gets their savings back, with interest, when the 3-year term ends – as long as the repayments are up to date
These products do not represent a free-for-all. Lenders are applying strict affordability assessments, credit checks, and lending limits to ensure borrowers can sustain repayments. High LTV mortgages are not a reckless throwback to 2007. They are a pragmatic response to today’s challenges. They offer hope to responsible, mortgage-ready FTBs hindered only by the deposit barrier.
The role of mortgage intermediaries is pivotal here. Young people are better served by consulting a good broker who can navigate the array of high LTV options, compare rates, and find the right option for them. Rather than waiting for subsidies from the government, we should focus on raising awareness of these products and leveraging the expertise of intermediaries. Educating FTBs about the options available from lenders like April Mortgages, Halifax, Gable Mortgages, Vida Homeloans, and Accord Mortgages can turn the tide for a generation who think they’ve been priced out of the market and help them realise the dream of homeownership. The way forward lies in market-driven solutions, not handouts, and it’s time for all stakeholders to champion them.
I can attest to this personally – my first mortgage was a 100% LTV deal. And I wouldn’t want young professionals of today to be denied the option that gave me my crucial first step onto the property ladder.
Nick Jones is the mortgage sales and marketing director of Access FS
