Surge in first-time buyers taking on higher levels of mortgage debt to get on housing ladder

The number of first-time buyers saddling themselves with higher levels of debt to get on the housing ladder is growing, data suggests. The number of first-time buyers getting a mortgage with a loan-to-income ratio of 4.5 times salary or above increased from 27,500 in 2024 to 45,800 last year - a rise of 66 per cent - a Freedom of Information request to the Financial Conduct Authority by money app Plum shows.The figures included a tenfold increase in the number of mortgages with LTI ratios 5.5 times salary or above from 420 in 2024 to 4,628 last year. When you apply for a mortgage, lenders will calculate your LTI ratio. They figure out how much they will offer you as a loan depending on your annual income. Buyers using a mortgage with a higher LTI will typically pay a higher interest rate on their mortgage than if they stumped up a larger deposit or borrowed a lower multiple of their salary. Lenders usually lend up to 4.5 to 5 times your income, so if you earn £40,000 you may be able to borrow up to £200,000 - and if you're a couple both earning this amount, you could borrow £400,000.But a growing number of lenders are enabling buyers to borrow more than 4.5 times their income so long as they can prove they can afford the monthly repayments. More borrowing: A relaxation of the rules means more lenders are giving buyers the chance to borrow moreWhich lenders offer higher LTI ratio deals?Some lenders offer higher multiples to eligible borrowers. This month Coventry Building Society upped the LTI ratio for eligible borrowers to 6.5 times, meaning an eligible single applicant earning the average salary could potentially borrow up to £255,190 to buy a home.Using Coventry Building Society's deal an eligible first-time buyer could purchase the average first-time buyer property in England, priced at £245,450, with a 5 per cent deposit of £12,273. A minimum annual income of £30,000 is required for a single person and £50,000 for a couple. Self-employed people cannot apply for the deal. There are other lenders which offer 6.5 or even seven times salary, but they require higher deposits of at least 15 per cent of the property's value. April Mortgages, a lender fairly new to the market, gives buyers the largest loans based on their income. It enables them to borrow seven times their salary. They must earn a minimum of £50,000 per year whether applying as a single or joint applicant, put down a 15 per cent deposit and fix for at least ten years. Tipton Building Society offers up to 6.5 times income, but borrowers must put down a deposit of 20 per cent or more. There is no strict minimum income requirement as the lender assesses applicants based on their individual circumstances.Nationwide's Helping Hand mortgage lends six times income. It has a deposit requirement of 5 per cent based on a five-year fixed rate and buyers must earn £30,000 per year if applying alone, or £50,000 jointly.NatWest allows mortgage borrowing of 6.5 times income, but only for high earners with an income of £150,000 or more who are putting down a 25 per cent deposit.HSBC also has a 6.5 times loan-to-income mortgage but it is only available to its Premier bank account customers, who must have a yearly income of £100,000 or more, or have £100,000 in savings or investments with HSBC.Another option for first-time buyers are zero-deposit mortgages. Why have the rules been loosened?Reckless mortgage lending was blamed for the global financial crisis of 2008, which brought some banks to their knees and saw people lose their homes. In 2014 former business secretary Vince Cable said buyers should generally only be permitted to borrow 3.5 times their annual income for a mortgage. Regulation limited how much lenders were able to lend, technically, only 15 per cent of their new mortgages could be at higher than 4.5 times LTI. After the global financial crisis of 2008, mortgage lenders started to play it safe. But house prices have grown significantly while many people's pay has remained stagnant. Over the years, this has meant the only option for many buyers has been to borrow more or try and save up a huge deposit. In July 2025 the Prudential Regulation Authority announced it was reviewing LTI restrictions. The review is ongoing but the rules have already been relaxed. Mortgage providers no longer need to calibrate their offering of high LTI mortgage products to ensure they did not exceed 15 per cent of their mortgage book. So, a growing number of lenders are offering mortgages at higher LTI ratios. You still need a decent income and a good credit score to get these deals. According to the Financial Conduct Authority's data, the total number of first-time buyer loans jumped to 380,716 last year from 327,001 the year before, an increase of 16 per cent.First-time buyer loans based on single incomes increased from 149,191 to 174,769, a 17 per cent increase, while joint income loans rose from 177,808 to 205,947, a 16 per cent rise. Is this good or bad for borrowers? A potential pitfall of more lenders offering higher LTI ratio mortgages is buyers stretching themselves too far financially. If someone loses their job or sees their financial circumstances change, the higher level of borrowing would also be problematic. Rajan Lakhani, a personal finance expert at Plum, said: 'While the shake-up has been positive in allowing first-time buyers to get on the housing ladder quicker, there are different strategies out there for buyers who don’t want to take on more debt than they have to.'Building a deposit through a Lifetime Isa can mean you borrow less, and mitigate exposure to any jump in interest rates later on.'Nicholas Mendes, mortgage technical expert at John Charcol said the LTI data via Plum 'should not be read as evidence that lenders are suddenly taking excessive risks'. He added: 'The tenfold increase in mortgages at 5.5 times income or above is the figure that stands out most. 'However, it is important to put that into context. There were 4,628 of these loans in 2025 out of more than 380,000 first-time buyer mortgages, so they still account for only a relatively small part of the market.'Higher income multiples are not automatically irresponsible. A borrower earning £80,000 with strong career prospects and relatively low outgoings can look very different from someone on a lower income with little monthly surplus, even if the headline income multiple is the same. 'Lenders are still required to assess whether the mortgage is affordable rather than simply lending somebody a fixed multiple of their salary.'Where it does become more concerning is if borrowers are taking a high income multiple alongside a small deposit, leaving themselves with very little financial headroom. 'Someone borrowing at five or five and a half times income is naturally more exposed if their circumstances change, their household costs increase or mortgage rates are higher when they next need to refinance.'Best mortgage rates and how to find them Mortgage rates have shot up again due to inflation triggered by the conflict with Iran reversing hopes that the Bank of England would cut rates. This means those remortgaging or buying a home face higher costs.That makes it even more important to search out the best possible rate for you and get good mortgage advice, whether you are a first-time buyer, home owner or buy-to-let landlord.This is Money's partner L&C can help you with its fee-free mortgage service.> Compare mortgage rates> Find the right mortgage for you To help our readers find the best mortgage, This is Money has partnered with the UK's leading fee-free broker L&C.This is Money and L&C's mortgage calculator can let you compare deals to see which ones suit your home's value and level of deposit.You can compare fixed rate lengths, from two-year fixes, to five-year fixes and ten-year fixes.If you’re ready to find your next mortgage, why not use This is Money and L&C’s online Mortgage Finder? It will search 1,000s of deals from more than 90 different lenders to discover the best deal for you.> Find your best mortgage deal with This is Money and L&C Mortgage service provided by London & Country Mortgages (L&C), which is authorised and regulated by the Financial Conduct Authority (registered number: 143002). The FCA does not regulate most Buy to Let mortgages. Your home or property may be repossessed if you do not keep up repayments on your mortgage.