The UK property market saw a rise in first time buyer activity during 2025. According to the latest Nationwide analysis, the number of people securing first time buyer mortgages was around 20% higher than the previous year.
This rebound reflects easing affordability pressures, supported by lower mortgage rates and slower house price growth. As a result, many new buyers were able to afford slightly larger loans and take advantage of improved borrowing conditions.
Increasing Access to Higher LTV Mortgages
Nationwide’s data shows the proportion of high loan-to-value (LTV) lending reached its highest level in more than ten years. This trend suggests lenders are becoming more comfortable offering mortgages to those with smaller deposits.
At the same time, the house price to earnings ratio fell below the 20-year average, standing at 4.7. This shift indicates that, for many, first time buyer mortgages are becoming more accessible, as property prices rise more slowly while wages increase.
Slower Price Growth and Lower Rates
Affordability has improved partly because house price growth has slowed in most parts of the UK. Meanwhile, average mortgage rates have dropped compared with a year ago, easing monthly repayment pressures.
Moneyfacts reports that a two-year fixed rate mortgage currently averages 5.04%, compared to 5.8% at the start of 2025. For first time buyers, that half-a-percent difference can translate to meaningful savings and greater confidence when applying for a loan.
However, the situation remains uneven. While some regions have benefited from falling mortgage costs and smaller price increases, other areas — notably London and the South East — still present major affordability challenges.
What Buyers Are Paying Each Month
Nationwide’s affordability measure helps to show the average cost of first time buyer mortgages relative to income. Someone earning the average UK salary and purchasing a typical first home with a 20% deposit would now spend around 32% of their take-home pay on their mortgage.
That figure is slightly above the long-term average of 30% but far below the historical peak of 48% seen in 1989. The data points to gradual improvement, although conditions remain tighter than before the pandemic housing boom.
Progress on the House Price to Earnings Ratio
Andrew Harvey, Nationwide’s senior economist, noted that the first time buyer house price to earnings ratio has declined from about 5.7 between 2021 and 2022 to 4.7 in 2025.
This puts it just below the two-decade average, suggesting that market conditions are getting closer to normal levels. He added that it is “a little easier for prospective buyers to save for a deposit than in previous years,” though rising rents continue to make this difficult for those not yet on the ladder.
The Deposit Challenge Remains
Despite improved affordability, saving for a deposit is still one of the biggest barriers to securing first time buyer mortgages. On average, a 10% deposit now stands at around £23,000 nationwide.
For those saving roughly 10% of their income — around £320 per month — it would take nearly six years to reach that target. However, affordability still varies sharply between regions, making the path to ownership significantly longer for some.
Regional Differences Still Defined
Regional data shows that buyers in London continue to face the toughest conditions.
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A 10% deposit in London is more than three times higher than in northern regions.
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A Londoner typically needs around nine years to save their deposit.
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Someone buying in the North could do the same in around four years.
These figures highlight that while national averages paint a picture of improvement, the reality for many depends heavily on location and local income levels.
Family Assistance Continues to Support Buyers
Many people are still relying on outside help to access first time buyer mortgages. Nationwide’s research shows that over one-third of first time buyers received financial support in 2024/25.
This assistance often came as a gift or loan from family or friends, or through an inheritance. The trend remains a significant part of the homebuying landscape, particularly in regions with high property prices.
Affordability Ratios Across Regions
Nationwide’s analysis also highlighted regional variations in house price to earnings ratios.
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The UK average ratio is now 4.7.
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London continues to lead as the least affordable region, with a ratio of 7.5.
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Scotland sits at the other end of the scale, at 2.9.
Most regions have seen slight improvements over the past year, suggesting gradual rebalancing across the property market.
Outlook for 2026: Gradual Improvement Expected
Looking forward, Nationwide expects housing market activity to continue strengthening through 2026. The lender anticipates modest improvement in affordability as income growth outpaces house price increases and mortgage rates continue to fall.
If these trends persist, first time buyer mortgages could become more attainable for a wider group of prospective homeowners. While challenges remain, particularly around deposit saving, the overall direction suggests a more stable and accessible market for those taking their first step onto the property ladder.
Please note: This blog is for general information only and does not constitute financial advice.