Santander has introduced a new mortgage product designed to ease the entry into homeownership for first-time buyers. The lender’s My First Mortgage offers loans of up to 98% of the property’s value, requiring a minimum deposit of £10,000.
With rising property prices and stagnant wages posing a long-term barrier to ownership, the bank’s offer marks a notable shift in accessibility. At a time when higher deposit requirements remain a key obstacle, the deal is expected to open the door for buyers previously priced out of the market.
A Higher Loan-To-Value Option Without Arrangement Fees
The new mortgage stands out by going beyond the traditional 95% loan-to-value cap often seen in high street offerings. According to Santander, My First Mortgage is a five-year fixed-rate product set at 5.19% interest, and does not include an arrangement fee. This combination of high borrowing potential and predictable costs is tailored for those stepping onto the property ladder for the first time.
Borrowers must still contribute a minimum of £10,000, which in some cases could equate to just 2% of the purchase price. Speaking about the launch, David Hollingworth, associate director at L&C Mortgages, said the move represents “an important addition from a major lender” and contributes to the “increasingly healthy range of mortgages for those with little or no deposit,” as reported by BirminghamLive.
While the offer will not suit all financial situations, it signals a growing willingness among lenders to support buyers with low upfront capital. Hollingworth added that, despite wider choice and lower rates still favouring those with larger deposits, the new product “should help more to access homeownership sooner than they may have thought possible.”
Market Conditions and Affordability Trends Remain Mixed
The launch coincides with a broader period of shifting mortgage rates and affordability benchmarks across the UK housing market. According to BirminghamLive, both Nationwide Building Society and Virgin Money have recently increased selected fixed-rate deals by up to 0.19% and 0.14% respectively, suggesting continued lender sensitivity to interest rate expectations and borrowing costs.
At the same time, house prices continue to edge upward. Nationwide reported a 0.3% rise in average property prices last month, with annual house price inflation reaching 1% in January. These moderate increases reflect a housing market still navigating economic uncertainty.
Despite price growth, affordability may be improving slightly in some areas. Robert Gardner, Chief Economist at Nationwide, stated that “all parts of the UK, with the exception of Northern Ireland, saw an improvement in affordability over the past year.” According to Gardner, a typical first-time buyer with a 20% deposit would now be spending around 32% of their take-home pay on mortgage payments, close to the long-run average of 30%, and notably below the 2023 high of 38%.
The introduction of high loan-to-value products such as Santander’s may help bridge the gap further, particularly for those unable to amass larger deposits. Yet eligibility requirements still apply, and access remains contingent on meeting specific lending criteria. With the mortgage landscape evolving and competitive products entering the market, first-time buyers are likely to see new opportunities emerge, though navigating them will continue to demand caution and clarity.
