I don’t know about you but I feel there’s a sense of the market holding its breath at the moment. We’ve got another Budget to come in November and a number of health warnings on the economy bringing with it likely further tax rises and possible changes to Stamp Duty.
This said, I personally think it’s all too easy to talk about sentiment and outlook without looking at what actually matters to people living day to day. People still need to move home when their families get bigger or smaller. People get divorced and move out of family homes. Where they can, renters save their deposits because, we all know, they still really want to become homeowners. There are plenty of things happening on the ground that are helpful for current and would-be new borrowers.
Renters are actively preparing to buy
Apparently, two fifths of tenants aged 25 to 34 have explored whether they could afford to purchase while more than a third have searched for a potential property to buy, according to a poll by Pegasus Insight. In Central London, 39% of renters have checked affordability, 20% have viewed homes they might want to buy and 21% have spoken to mortgage advisers.
Mortgage terms are getting longer and repayments more affordable
According to at least one recent report, perhaps the most striking development in the current UK housing market is the proliferation of extended mortgage terms.
While 25-year terms were once standard, products now routinely offer 35-year terms as a standard option, 40-year products are gaining a significant share of the market and some lenders are even offering 50-year mortgages, often structured as multigenerational mortgages.
Small deposits
There’s no denying that saving a deposit while meeting the rising costs of living is a challenge. But there are lenders out there doing their bit to help.
Newcastle Building Society recently launched its First Step mortgage, which lets borrowers take up to 98% loan-to-value (LTV) with a minimum deposit of just £5,000. Mortgage values range from £96,000 to £350,000 on a 5-year fixed rate. Unlike a number of family-assisted products, this one is designed for those who want to buy on their own.
Right to Buy boon
Over the summer, Barclays announced it will use the right to buy discount in place of a direct deposit. Borrowers will also receive the benefit of the reduced rates available for lower loan-to-value – for example, someone receiving a 40% discount on their home under the RTB scheme will be considered to have a 40% deposit, and therefore access to 60% LTV rates. Lending is capped at 90% of the full market value, ensuring responsible borrowing, and excludes high-value properties, where a deposit is still required.
The pipeline looks healthy
September’s Mortgage Lenders and Administrators Statistics for Q2 2025 showed a positive outlook for lending in the third quarter. Approvals granted but not yet advanced surged by 14.6% between Q1 and Q2, to £78.2bn, the highest since the third quarter of 2022. On an annual basis, commitments rose 16.8%. The share of advances above 90% LTV rose 0.4% to 7.1% – the highest since 2008 and 1.1% higher than a year earlier.
Easier loan-to-income ratios
On the heels of improved stress test improvements that had already resulted in an average increased borrowing power of £35,000, we have seen significant improvements in loan-to-income (LTI) ratios from a wide range of lenders.
The updates, which followed amended loan-to-income rules announced by the Treasury in July 2025, mean that customers earning less in many instances can now access as much as 7x their income. Of course lending limits reflect lending appetite and market specialism but many lenders have taken advantage of the change in rules to offer more which is both helpful and meaningful.
Helping hand extended
Nationwide has also made it easier for more people to get on the property ladder by relaxing its income criteria for the Helping Hand mortgage, which offers lending of up to six times income. Eligible first-time buyers can apply for the mortgage with a £30,000 salary, down from £35,000, and joint applicants with a £50,000 combined salary – down from £55,000. This is expected to support an additional 10,000 first-time buyers each year.
These elements are clear enough evidence that while headwinds may exist, the UK mortgage market is in a much better place. Of course, an unhelpful budget can undo much of this good, and the Chancellor must tread carefully. But we should be mindful over the coming months that we avoid talking ourselves and our prospective borrowers into an inaccurate corner of gloom and remember that in terms of available finance the market is much improved from where it has been.
Craig Hall is director, strategic partnerships, financial services at LSL Property Services
