First-time buyers are taking on larger mortgages than ever before, as lenders adopt a more flexible approach to affordability and borrowing limits.
New analysis from Savills shows that more than 390,000 people bought their first home in the year to September, borrowing a combined £82.8 billion. This represents the highest total on record and an increase of around 30 per cent compared with the previous 12 months.
The average mortgage taken out by a first-time buyer exceeded £200,000 for the first time last year and has continued to rise, reaching £210,800 in 2025.
Stronger wage growth appears to have helped affordability, as has a more relaxed stance from lenders in terms of income multiples and loan-to-value ratios.
Earlier this year, the Bank of England eased some of its lending restrictions, making it simpler for first-time buyers to access the market, including allowing mortgages with smaller deposits. The original rules, introduced in 2016, limited lenders so that no more than 15 per cent of their mortgage lending could exceed 4.5 times a borrower’s income. In July, the Bank launched a review of these rules and allowed lenders to apply for permission to exceed that cap.
Several lenders have already responded. Nationwide, the UK’s largest lender to first-time buyers, lowered the income threshold at which borrowers can access mortgages of up to six times their salary from £35,000 to £30,000. Other providers, including Yorkshire Building Society and Skipton, have also relaxed their criteria.
In addition, most banks and building societies have reduced their mortgage stress test rates this year. These tests are designed to ensure borrowers could still meet repayments if interest rates were to rise. The changes were approved by the Financial Conduct Authority (FCA), which regulates the sector.
Stamp Duty Changes
Estate agents Savills estimates that first-time buyers now account for around 20 per cent of total UK housing expenditure — the highest share since 2007. Part of this rise has been driven by a rush to complete purchases ahead of the end of the stamp duty holiday earlier in the year.
From March, the stamp duty threshold for first-time buyers reverted to £300,000, down from £425,000, where it had stood since September 2022. As a result, many buyers sought to complete transactions before the change, after which stamp duty of 5 per cent applies to the portion of the purchase price above the threshold.
The figures come as the FCA confirmed this week that it is exploring further changes to mortgage rules aimed at supporting first-time buyers, as well as the self-employed and older borrowers. These could include easing restrictions on interest-only mortgages, potentially allowing borrowers to state an intention to switch to equity release or other later-life lending products at the end of the term.
The regulator is also considering whether to permit so-called “low start” interest-only mortgages, which would convert into full repayment loans after an initial period.
Record Borrowing by First-Time Buyers
"Stronger wage growth appears to have helped affordability"
Paul Freeman
Financial Adviser
16th December 2025
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