First-time buyers are taking on larger mortgages to get onto the property ladder, with borrowing costs at their highest in three years. The Moneyfacts Average New Mortgage Rate increased to 5.89% at the start of November, up from 5.83% in October. This marks the highest rate since November 2023.
Average two-year fixed mortgage rates rose to 5.97%, and five-year deals reached 6%. Despite these higher costs, lenders are offering more high loan-to-value (LTV) mortgages. The number of 95% LTV products increased in October, and these, combined with 90% LTV mortgages, now make up about 24% of mainstream mortgage products.
However, options for borrowers with larger deposits have decreased, with 60% LTV products falling to their lowest level since March 2024. This has led to the average LTV across mainstream mortgage products reaching a record 79.31%, the highest since Moneyfacts' electronic records began in November 2011.
Separate figures from the Office for National Statistics (ONS) indicate that first-time buyers borrowed a median LTV of 85.6% in 2025, the highest since before the 2008 financial crisis. The average house-price-to-income ratio for first-time buyers also rose from 3.7 in 2006 to 4.3 in 2025.
Rachel Springall, a finance expert at Moneyfacts, noted that affordability constraints are leading first-time buyers to seek higher LTV options or larger loan-to-income ratios to stretch their budgets. She also suggested a potential trend of buyers skipping smaller starter homes for larger properties, which could disrupt the wider housing market.