The percentage of borrowers closing deals with a loan-to-value ratio of 95% has risen 61% between 2024 and the start of this year, a new analysis from Mojo shows.
By 2024, it says 7.7% of its customers will have taken out a mortgage with an LTV of 95% or higher, while this will rise to 10.8% by 2025.
So far this year, the mortgage broker has found that 12.2% of its customers are now closing deals with LTVs of 95% and above.
The increase in approvals for low deposit mortgages follows regulatory changes that have made it easier for more lenders to offer high LTV deals.
Mojo has welcomed the launch of Santander’s 98% LTV product and updated its own maximum LTV thresholds so customers can apply for this deal.
Mojo Mortgages head of mortgages John Fraser-Tucker said: “This isn’t just a product, it’s a direct challenge to the rent trap that has oppressed a generation of aspiring homeowners.
“As the cost of living crisis continues to put pressure on monthly disposable income, saving for a traditional 10% or 15% down payment has become increasingly out of reach for many.”
He says the new 98% LTV option is especially important for buyers without access to family support.
Fraser-Tucker says: “For years the market was moving towards a two-tier system.
“On the one hand, you have buyers who are supported by the Bank of Family and can access lower interest rates through larger deposits.
“On the other hand, you have solo savers who, despite strong salaries and impeccable credit, are running a race where the finish line is moving faster than they can save.
“By lowering the barrier to a minimum deposit of £10,000, this 98% offer allows buyers to move from paying a landlord’s mortgage to building equity years earlier than previously possible.”
However, Fraser-Tucker says affordability remains a limitation.
He says: “While the 2% down payment is rearing its ugly head, the real story for 2026 is affordability.
“Santander’s cap of 4.45 times salary reminds us that while lenders are becoming more flexible on entry costs, they remain disciplined on ongoing sustainability.”
But he remains hopeful that Santander’s move will cause a ripple effect and encourage other lenders to follow suit, creating more choice for first-time buyers.