The share of highly leveraged mortgages in the UK housing market has climbed to its highest level since the 2008 global financial crisis, according to new data released by the Bank of England.
In the first quarter of 2025, home loans covering more than 90% of a property’s value made up 6.7% of all new mortgages, up from 6.3% in the final quarter of 2024. The last time the market saw comparable levels was in the second quarter of 2008, at the height of the financial crash.
The increase follows changes to mortgage affordability rules announced by the Bank of England in March, which removed the requirement for lenders to stress test borrowers at the standard variable rate plus 1%, provided they take on a fixed-rate deal of less than five years.
Lucian Cook, head of residential research at Savills, said: “The recent relaxation of affordability tests by the major lenders is going to result in more lending at higher LTVs, something the Financial Conduct Authority will have a keen eye on as it weighs up whether it can go further in relaxing mortgage regulations, without bringing too much risk into the financial system.”
While higher LTV mortgages increase risk for both borrowers and lenders, some analysts believe falling interest rates and improving market confidence will help mitigate that risk. Cook noted that rate cuts should support house price growth, allowing borrowers to build equity faster despite their higher starting debt levels.
Separately, new figures from UK Finance revealed that lending to older borrowers is also surging. In the first quarter of the year, more than 38,000 new mortgages were issued to borrowers over 55, a 33.5% increase year-on-year. The total value of lending to this age group hit £6.1 billion, up 42.6% compared with the same period last year.
The data suggests that both younger buyers with small deposits and older homeowners are taking advantage of improving lending conditions, even as regulators weigh the long-term risks of looser standards.
