Santander has unveiled a 98% mortgage aimed at first‑time buyers in the UK, allowing a mere 2% deposit. The move positions the lender among the largest UK banks to broaden access for low‑deposit borrowers, potentially reshaping the mortgage market and easing entry for a demographic that has struggled with high upfront costs in 2024 year.

The announcement follows a tightening of lending standards after the 2023 housing slump and a surge in interest rates. By cutting the deposit requirement, Santander taps into a pool of buyers who previously turned to shared‑ownership or government schemes. Competitors like Lloyds and NatWest have similar offers, intensifying price wars in the UK mortgage sector.

Investors will monitor uptake rates and regulatory scrutiny from the FCA, especially as the Bank of England keeps rates high. If the product gains traction, other lenders may lower deposit thresholds, potentially driving a broader shift toward more affordable homeownership. Analysts suggest the initiative could lift Santander’s mortgage book by up to 10% over the next two years.