Lowest deposits in 17 years? It’s real, and it’s reshaping the 2025 mortgage market

Homebuyers in the UK are seeing a major shift in lending trends, with the number of low-deposit mortgage deals now at their highest level since the 2008 financial crisis. According to new data from Moneyfacts, buyers with smaller deposits, particularly 5% or 10%, now have more product choices than at any point in the past 17 years.

This resurgence in low-deposit lending offers hope for first-time buyers and those struggling to break into the property market amid high house prices and living costs. While interest rates remain relatively elevated, the expanding range of options signals increased lender competition and confidence.

New figures reveal that buyers with a 5% deposit now have 442 mortgage deals available to them, a significant rise from just 204 deals two years ago. Meanwhile, buyers with a 10% deposit have access to 845 products, up from 684 in April 2023.

This increase in product availability represents a positive step forward for those looking to get onto the property ladder, especially at a time when affordability remains one of the biggest challenges in the market.

But despite the broader range of options, low-deposit buyers are still paying for the risk, with the average interest rate for these mortgages sitting well above 5%. In contrast, borrowers with a 40% deposit typically benefit from lower interest rates, often under 5%, reflecting the reduced risk to lenders.

While mortgage options are improving, competition among buyers remains fierce. According to new research from Zoopla, homes in England and Wales are currently spending an average of 36 days on the market before an offer is accepted. Two-bedroom homes, in particular, are selling fast, averaging just 23 days.

This fast-moving market means buyers need to be well-prepared and responsive. Once an offer is accepted, completing the transaction can take 4 to 6 months, depending on the complexity of the chain. For buyers hoping to move in 2025, early planning and strong preparation are key.

Mortgage expert Rachel Springall from Moneyfacts welcomed the increase in low-deposit deals, calling it a “healthy step in the right direction.” However, she noted that only 6% of all mortgage products currently cater to buyers with just a 5% deposit, suggesting that, while conditions are improving, there’s still progress to be made in terms of true affordability.

Regional trends show that homes in northern England are typically selling faster than those in the south, largely due to more affordable prices and stronger demand. Manchester and Waltham Forest in London recorded average sale agreement times of just 19 days, the fastest in the country.

Industry experts emphasise the importance of accurate property valuations. Richard Donnell from Zoopla noted that aiming too high on the asking price can impact how long it takes to agree a sale, especially in a market where buyers now have more choices.

The rise in low-deposit mortgages brings new opportunities, but also complexities. Buyers need to weigh the pros and cons of lower upfront costs against potentially higher interest rates and overall affordability.

At Mortgage-Tek, we’re here to help you make sense of it all. Whether you're a first-time buyer or considering your next move, our experienced advisers provide independent, expert guidance tailored to your situation.