Zero-deposit mortgages hit five-year high as Britons struggle to save

No-deposit mortgage lending has reached its highest level in five years, driven by buyers unable to build up savings for a home.

In the first nine months of 2025, lenders approved 574 mortgages with no upfront payment, up from 423 in the same period in 2024.

The figures, obtained through a Freedom of Information request to the Financial Conduct Authority by Compare the Market, highlight the growing strain on would-be homeowners.

These mortgages, which cover the full value of a property, typically come with higher interest rates and stricter eligibility checks, making them both an opportunity and a risk for first-time buyers.

Despite rising demand, the market remains limited. Only a handful of lenders, including Barclays, Lloyds and Skipton Building Society, currently offer no-deposit mortgages, with each applying tight criteria for approval.

Borrowers opting for these mortgages face heightened exposure to negative equity, a situation arising when property prices decline below the outstanding loan balance.

This risk proves particularly acute for those who have contributed nothing towards their purchase price.

Lloyds operates its Lend a Hand scheme, which secures lending against family members’ savings.

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Barclays runs a comparable Family Springboard product and additionally provides full-value mortgages through the government’s Right to Buy programme.

The financial penalty for bypassing a deposit proves substantial over the lifetime of a loan.

Skipton Building Society currently charges 5.55 per cent on its five-year fixed rate product for those borrowing the full property value, compared with 5.28 per cent for customers providing a five per cent deposit, though this lower rate carries a £999 fee.

Calculated across a 30-year mortgage term on a property valued at £270,000, the borrower without a deposit would pay approximately £29,822 more in interest charges.

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Skipton imposes restrictions on its lending, excluding new-build flats from eligibility whilst permitting new-build houses, and caps the maximum borrowing amount.

Charlie Evans from Compare the Market described the figures as indicative of buyers facing difficulties setting money aside.

“While 100 per cent mortgages can remove the upfront hurdle of a deposit, they often come with higher rates,” he said.

David Hollingworth from mortgage broker L&C noted: “Lenders have increasingly sought to address the challenges that first-time buyers face.

Saving for a deposit is certainly not easy, especially alongside higher rents and cost of living.”

He added that borrowers who manage to gather a deposit will discover a wider selection of mortgage options available to them.

Geographically, the northwest and southwest of England recorded the greatest uptake of no-deposit lending, whilst Wales and London saw the fewest applications.