The average loan-to-value (LTV) on mortgaged homes across the UK has fallen to 59%, down from around 70% in 2012, research suggests.
Analysis by the Intermediary Mortgage Lenders Association (IMLA) said this highlights the structurally lower leverage of today’s housing market.
📉 Mortgage Leverage & Equity
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Average UK loan-to-value (LTV) has fallen to 59% (from ~70% in 2012).
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Since the financial crisis, £677bn in housing equity has been built up.
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Only 42% of private homes have a mortgage — most are owned outright or with low debt.
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Lower LTVs have:
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Reduced sensitivity to interest rate changes
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Strengthened overall housing market resilience
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🚪 First-Time Buyer Challenges
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Estimated 3.5 million potential first-time buyers remain locked out of the market.
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Many require:
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Higher-LTV mortgages
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Innovative and flexible lending products
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Higher-LTV lending must remain subject to strict affordability checks.
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Greater awareness and professional advice are needed to help buyers navigate options.
🏠 Market Supply & Demand
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February on track for highest new listings in a decade, but:
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New listings down 0.2% annually
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Overall homes for sale up 6%
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Sales agreed down 3%
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Buyer demand down 8%
💷 Mortgage Rates & Affordability
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Average mortgage rates at lowest level in four years.
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Affordability criteria have eased.
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40% of UK homes are now cheaper to buy than rent (with 20% deposit), up from 25% last year.
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In some northern regions and Scotland, over half of homes are cheaper to rent than buy at a 6.5% stress rate.
📊 House Prices
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UK house price growth at 1.3% annually (down from 1.8% last year).
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Strongest growth:
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Northern Ireland: 8%
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North West: 3.3%
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Scotland: 2.8%
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North East: 2.5%
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London prices down 0.2% year-on-year.
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Southern England remains the slowest market.
🔎 Outlook for 2026
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Market stability improving after recent volatility.
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Lower mortgage rates and subdued price growth support buyers.
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Modest price growth expected through 2026, with regional variation.
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Long-term affordability depends on increasing genuinely affordable housing supply.
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Sellers advised to seek local market guidance for pricing strategy.
IMLA’s report The New Normal – prospects for 2026 and 2027 reveals that since the financial crisis, an estimated £677bn of housing equity has built up across the UK housing stock, through a combination of mortgage repayment and rising property values. As of 2024, around 42% of private homes carry a mortgage, meaning most properties are owned outright or with relatively modest levels of debt.
IMLA said lower average LTVs have reduced the sensitivity of many borrowers to interest rate movements and strengthened overall market resilience.
However, the association said this strength among existing homeowners sits alongside substantial barriers to entry. IMLA’s Affordability Paradox 2025 report revealed that an estimated 3.5m potential first-time buyers who might historically have been expected to purchase remain outside the market, many of whom will require innovative mortgage products to get on the housing ladder.
Outstanding housing market issues
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.
She said: “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.”
February is on track to record the highest number of new listings in a decade but the overall supply of new homes is down, according to latest research.
Combined with falling mortgage rates, the market is currently looking particularly good for first time buyers, with 40% of homes for sale now cheaper to buy with a mortgage than rent.
But the data shows a 0.2% annual drop in new listings as of the first weeks of February, while the overall amount of homes for sales is up 6%.
Sales agreed and buyer demand are also down 3% and 8% respectively on an annual basis.
The research shows confidence that new listings are coming to the market based on previous years.
Mortgage price war
This is helped by average mortgage rates for new loans hitting their lowest level for four years.
As such, buyers currently have access to some of the best deals seen for several years, particularly those with larger deposits, and this is supporting increased sales activity.
Criteria in terms of how mortgage lenders assess affordability has also eased .
This means that 40% of homes currently for sale in the UK are cheaper to buy with a mortgage than the cost of renting locally, assuming a 20% deposit. This is a big improvement over 25% of homes in 2025, showing that home ownership has become more affordable than in recent years.
In some regions – the North East, North West and Scotland, over half of homes for sale are cheaper to rent than buying at a 6.5% mortgage ‘stress rate’.
House price growth remains in check
Despite the increase in market activity, house price growth remains subdued at 1.3% annually, according to the index compared with 1.8% this time last year.
Northern Ireland is registering the fastest rate of price growth at 8% and across Great Britain, the North West is the strongest-performing region, with prices up 3.3% year-on-year, followed by Scotland (2.8%) and the North East (2.5%). In contrast, average prices in London are 0.2% lower than a year ago.
The areas with higher price growth are more affordable and have fewer homes for sale than a year ago, limiting buyer choice and supporting price growth.
Across the rest of the country, price growth is the same or lower than a year ago.
Southern England remains the slowest market, with average prices broadly unchanged over the last 12 months. However, this marks an improvement on the more widespread price falls seen in the second half of 2025.
Despite improved levels of market activity, subdued house price inflation is good news for buyers and sellers and represents a more stable market. More sellers putting their home on the market shows a strong desire to move home.
Lower mortgage rates and improved affordability of mortgages means now could very well be the best time to buy a home in recent years, especially for first time buyers with more homes available to buy for less than the cost of renting.
We expect continued modest rates of price inflation over 2026 which will support healthy levels of sales with some wide variations across local markets. Sellers need to seek the advice of local agents to get the right strategy for their home.
Head of UK residential research at Knight Frank, said: “House prices are being kept in check by rising supply as plans delayed by last year’s Budget are activated and more landlords attempt to sell due to red tape.
Buyers are more circumspect than sellers but further mortgage rate declines and increasingly realistic asking prices will support transactions this spring. The political noise hasn’t cut through to the mainstream housing market yet but we expect plans will be put on hold when the starting gun is fired on the Labour leadership race.”
Nathan Emerson, chief executive of Propertymark, added: “It is encouraging to see renewed confidence in the housing market, with more competitive mortgage rates and improved affordability checks helping more people step onto or move up the housing ladder. After years of cost-of-living pressures and higher interest rates, 2026 is showing signs of greater stability. With inflation dipping down earlier this month, it is hoped the Bank of England may have the confidence to bring the base rate down further when they next meet.
At the same time, stronger price growth in parts of the UK outside London reflects changing working patterns and affordability considerations, as more people reassess where they can achieve a good standard of living.
However, rising house prices are not sustainable without a significant boost to the supply of genuinely affordable homes. Meeting housing delivery targets will be crucial to ensuring long-term affordability and preventing buyers from being priced out of areas seen as more attainable.”
