The average loan-to-value (LTV) ratio on UK mortgaged homes has fallen to 59%, down from around 70% in 2012, reflecting lower overall borrowing levels in the housing market, according to the Intermediary Mortgage Lenders Association (IMLA).

IMLA’s report, The New Normal – prospects for 2026 and 2027, estimates that £677bn of housing equity has accumulated since the financial crisis through a combination of mortgage repayments and rising property values. By 2024, around 42% of private homes carried a mortgage, leaving the majority owned outright or with relatively low levels of debt.

Lower LTVs have reduced many borrowers’ sensitivity to interest rate changes, supporting overall market stability. Yet, IMLA notes that high levels of equity among existing homeowners contrast with ongoing barriers for first-time buyers. Its Affordability Paradox 2025 report finds an estimated 3.5 million potential first-time buyers remain outside the market, many of whom will need new mortgage solutions to access homeownership.

Kate Davies, executive director of IMLA, said: “The market has demonstrated resilience, but we cannot ignore the access gap. There is a generation of aspiring homeowners who will need higher loan-to-value options, creative solutions and flexible products to take their first step.

“Those products already exist and innovation is continuing, but standards must remain robust. Higher-LTV lending must sit within disciplined affordability testing to ensure borrowing is sustainable over the long term.”

Davies added that improving access is not simply a question of product availability, but of awareness and guidance.

“First-time buyers need clear information about the options available to them and support in navigating an increasingly complex market. Professional advice plays a critical role in ensuring that those entering at higher LTV levels do so responsibly and with confidence.”