The number of first-time buyers borrowing more than 4.5 times their income to purchase a home jumped by two-thirds in 2025, revealing the strong response to a loosening of lending rules last year. Following concerns over risky lending in the wake of the financial crisis, in 2014 the Financial Policy Committee of the Bank of England barred lenders from handing out more than 15 per cent of new mortgages at or above 4.5 times income. But in July last year it relaxed the rules to give first-time buyers a helping hand on to the property ladder, prompting lenders to offer mortgages at higher loan-to-income (LTI) ratios, some going as high as six times income.

The number of first-time mortgages with an LTI ratio of 4.5 or above hit 45,800 in 2025, 66 per cent higher than the year before, according to a Freedom of Information request submitted to the Financial Conduct Authority by money app Plum. The number with LTI ratios above 5.5 leapt 10-fold to 4,628 last year, including single and joint borrowers. David Hollingworth, director at broker L&C Mortgages, said the trend was positive. “The message must be getting through to consumers because it’s such a sharp turnaround in quite a short space of time.” Last year’s loosening of regulations meant mortgage providers no longer had to calibrate their offering of high LTI products to ensure they did not exceed 15 per cent of their mortgage book. “This means you’ve got a steadier range of products available to first-time buyers,” said Hollingworth.

Coventry Building Society this month began offering mortgages at 6.5 LTI for eligible first-time buyers — those earning a minimum of £30,000 a year and excluding the self-employed. Aaron Strutt, product director at broker Trinity Financial, said: “For many first-time buyers the thought of borrowing up to 6.5 times salary is not that appealing, but they will do it if it means they can get on the property ladder. Policies like this mean many first-time buyers will be less reliant on the Bank of Mum and Dad.” Some lenders, such as Nationwide, have been lending to first-time buyers at higher income multiples for several years.

Its Helping Hand mortgage, which allows borrowing up to six times income, in 2025 saw a 57 per cent jump in the number of first-time buyer mortgages taken at or above five times income, as well as a fivefold increase in loans at or above five and a half times income. Plum said the lending shake-up had allowed more buyers to get on to the housing ladder, but it urged aspiring property owners also to consider saving into the Lifetime Isa, which offers a 25 per cent bonus on savings of up to £4,000 a year when spent on a home and was “designed precisely to help people get there without taking on income multiples they may later regret.” A common complaint of the Lifetime Isa has been that buyers must choose properties priced no higher than £450,000 to qualify, a figure that has not risen with inflation since the Isa was launched in 2017 and can present problems for buyers in London and south-east England. For those buying under this threshold, though, it is worth holding out for a bigger deposit, said Rajan Lakhani, personal finance expert at Plum. “The process of qualifying for a loan is often quicker for those with greater savings.” A larger deposit can unlock lower interest rates.

A buyer with a 20 per cent deposit on an average first-time buyer home with a 30-year term would save £124 a month compared with someone putting down 10 per cent, based on an interest rate of 5.06 per cent.