While the majority of first-time buyer searches are for higher loan-to-value (LTV) mortgages, a significant minority of borrowers appear to have a substantial deposit and are looking for deals at 75% LTV, the figures show.

Based on average UK house prices, that would mean a downpayment of around £67,800.

At the other end of the spectrum, almost a third (30%) of first-time buyers are seeking 90% LTV deals and 12% are looking for 95% LTV mortgages, suggesting that 42% may only have a deposit of 5 or 10%.

This translates to a downpayment of between £13,560 and £27,120 based on average house prices.

Borrowers with smaller deposits and those who have accumulated less equity, could be paying £174 more per month more compared to those with a larger deposit when borrowing the same amount.

Moneyfacts head of consumer finance Adam French says: “The wide spread of first-time buyer LTV demand reflects a housing market increasingly shaped by unequal starting points. 

“While many first-time buyers are stretching themselves with 90-95% LTV mortgages due to deposit constraints, a notable minority are entering the market with substantial deposits, often helped by family support or inheritance.

“The concern is that it is creating a two-tier market where buyers with higher deposits can access cheaper rates and lower monthly repayments, while others pay a hefty premium. 

“For second-time buyers and remortgage customers, the data shows equity remains king, with most waiting to build at least 25% equity.

“Although wise buyers should note that materially cheaper average rates kick in at around 15% equity.”

National Association of Estate Agents Propertymark president Mary-Lou Press adds: “There is a growing divide facing people trying to get onto, and move up, the housing ladder. 

“While it’s encouraging that a proportion of first-time buyers are able to enter the market with larger deposits, the reality for many is that high house prices and the cost of living make saving 20–25% simply unattainable without additional support.

“This is creating a two-tier system where those with access to family assistance or inherited wealth can benefit from lower mortgage rates and more choice, while others are forced into higher loan-to-value products with significantly higher monthly repayments.

“To level the playing field, we need sustained action to boost housing supply and build the right homes in the right places, alongside targeted support for first-time buyers to help them save and access affordable finance. 

“Without this, homeownership risks becoming increasingly out of reach for many aspiring buyers, particularly younger households and those without financial backing.”