Low-deposit mortgage lending has reached its highest share in 18 years, with new Bank of England figures showing that 8.4% of gross mortgage advances in the second quarter of 2026 were above 90% loan-to-value (LTV). This marks an increase from 8% in the previous quarter and 7% a year earlier, and is the highest proportion since the second quarter of 2008.
Rachel Springall, a finance expert at Moneyfactscompare.co.uk, stated that this rise highlights the vital role low-deposit borrowing plays in the housing market, as saving a large deposit can be a daunting task for many borrowers. She also cautioned borrowers about the risks of negative equity if house prices fall.
The Bank of England figures also indicate continued pressure from higher borrowing costs. The share of mortgage advances priced between two and three percentage points above Bank Rate increased to 3.1% in Q2 2026, the highest proportion since the first quarter of 2023.
Conversely, the value of outstanding mortgage balances in arrears fell by 1.9% during the quarter to £19.7bn, reaching its lowest level since the third quarter of 2023. The proportion of total outstanding mortgage balances in arrears remained at 1.1%.