London: Mortgage borrowing by first-time buyers has reached unprecedented levels, as rising wages and looser affordability checks enable purchasers to buy homes that were previously beyond their financial reach.
New analysis shows that easing lending rules and improving market conditions are significantly reshaping the entry point to the UK housing market. According to property agent Savills, the average first-time buyer borrowed a record £210,800 in the year to September.
During the same 12-month period, first-time buyers accounted for 20 percent of all spending in the UK housing market, the highest share recorded since at least 2007. In total, mortgage lenders advanced a record £82.8bn to around 390,000 first-time buyers over the period, representing a 30 percent increase compared with the previous year, Savills noted.
The rise in borrowing reflects a shift in buying behaviour, with some first-time buyers skipping the traditional first rung of the property ladder and purchasing houses rather than flats. Data from the Mortgage Advice Bureau shows the average age of a first-time buyer is now 34, while 31 percent already have children when they enter the property market.
Many buyers also benefited from the stamp duty holiday, which allowed them to pay no tax on the first £425,000 of a property’s value, enabling purchases of larger homes. The threshold was reduced to £300,000 in April. Falling prices in some parts of the country have also contributed to a more favourable buyer’s market.
Lucian Cook, head of residential research at Savills, stated that the record levels of borrowing were partly driven by a ‘slightly more relaxed approach’ from lenders. Cook added that home ownership is now more accessible than at any point in the past three years due to lower borrowing costs, reduced real house prices, and easier access to mortgage debt.
Typically, mortgage lenders cap borrowing at around 4.5 times a buyer’s income and apply stress tests to assess whether repayments would remain affordable if interest rates rose sharply. However, in March, the Financial Conduct Authority highlighted that some stress-testing practices may have been unnecessarily restricting access to affordable mortgages, reminding lenders they have flexibility in how these tests are designed.
Since then, most lenders have reduced the interest rates used in their stress tests, allowing many first-time buyers to increase their borrowing capacity by £20,000 to £40,000.
The relaxation of lending criteria comes as mortgage rates continue to ease. According to Moneyfacts, the average two-year fixed mortgage rate has fallen to 4.91 percent, while the average five-year fix stands at 4.86 percent, the lowest levels since before the September 2022 mini-budget.
House prices have also softened. Rightmove remarked that buyers can typically secure a property for around £2,000 less than a year ago and approximately £6,700 less than just a month earlier. As 2025 draws to a close, average asking prices across Britain are 0.6 percent (£2,059) lower than late 2024, at £358,138 in December, and 1.8 percent (£6,695) lower than in November.
Annual price growth has been strongest in north-west England at 2.6 percent, flat in London, and weakest in the south-west and south-east, both down 2.7 percent. While prices usually fall in December, Rightmove noted that this year’s decline has been larger than normal.
However, the website expects a stronger-than-usual ‘Boxing Day bounce’ as buyers who delayed moving plans due to budget uncertainty resume their property searches after Christmas.
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