Lately, the mortgage market in the UK has seen a substantial shift: lenders are offering more mortgages requiring as little as 5
Surge in Low-Deposit Options
According to data from Moneyfacts, there were 1,360 mortgage products in September that
These low-deposit deals now account for about **1919 % of the residential mortgage market — up from 17 % a year ago. Despite the increase, these deals remain a minority share of the total market, especially when broader mortgage options are considered.
Speed of the Market: Mortgage Shelf Life
One notable feature: mortgage deals are being snapped up quickly. The average “shelf life” — the period between a deal going live and being withdrawn — is now 17 days, down from 21 days in September 2024.
This rapid turnover underscoresThis rapid turnover underscores high competition among lenders and the urgency among borrowers to secure favorable terms.
Opportunities & Risks for First-Time Buyers
For many first-time buyers, these low-deposit offers represent one of their few chances to break into the market.
Ben Smith (Head of Commercial & Product Development at a building society) commented that first-time buyers face serious challenges:
- Rising house prices
- Growing rental burdens
- Difficulty in accumulating a substantial deposit
He noted that these new low-deposit options might ease one barrier — but they don’t erase the broader affordability problem or the risk associated with borrowing at high loan-to-value levels.
Broader Market Context &
While the increase in low-deposit deals is welcomed, several caveats apply:
- Affordability remains critical. Even if deposit thresholds fall, high monthly payments and interest rate pressures can make these mortgages
- Limited share of the total market.
- Policy and regulatory stance. The government has encouraged lenders to expand access and support growth — but they must balance that with prudent lending practices
What
- Whether the trend continues and low-deposit deals push beyond 20 % of the market
- How lenders adjust interest rates, fees, and qualifying criteria
- The impact on housing demand, especially among
- Any regulatory changes aimed at mitigating risk in high-LTV lending
