The £6.5bn Mortgage Shift Most People Missed

Good morning,

Last quarter, UK lenders handed out around £6.5bn in mortgages to people putting down less than a 10% deposit.

The entire buy-to-let market? About £6.19bn.

Same property market. Very different borrowers. And almost nobody reported it.

So we will.

Let’s dive in.

In this newsletter, you'll find...

• The number hiding in the Bank of England's spreadsheet

• If you remember one thing, make it this

• Feedback

The number hiding in the Bank of England's spreadsheet

On Monday, the Bank of England published its Q2 mortgage lending data. Total new lending: £77.4bn, up 31.7% on last year.

Buried in the detail are two percentages that tell a story.

Mortgages above 90% loan-to-value (small deposit, big loan), hit 8.4% of all new lending. That's the highest share since Q2 2008.

Buy-to-let dropped to 8.0%. Lowest since Q3 2024.

Do the maths on £77.4bn and you get roughly £6.50bn of thin-deposit lending versus £6.19bn for every buy-to-let mortgage in the country.

Quick honesty note: those two buckets can overlap slightly, because the Bank doesn't cross-reference deposit size against loan purpose. So treat this as a scale comparison, not two totally separate groups of people.

Zoom out and the picture gets clearer. Lending above 75% LTV hit 47.5% (highest since Q4 2007). Nearly half of all new mortgages now go to borrowers taking 4x their income or more.

Why "highest since 2008" isn't what you think

I know what that date does to your brain. Resist it.

Two things stop this being a crash story.

First, mortgages above 95% LTV are just 0.5% of lending. In 2007 you could get 125% of a property's value. That product doesn't exist now.

Second, arrears actually fell. Total arrears balances dropped 7.3% over the year to £19.7bn. Repossessions fell 15.6% to 2,058.

But here's the bit worth sitting with, and it's the reason I wanted to write this one.

Arrears are a rear-view mirror. They tell you how loans made three, five, ten years ago are performing. The loan-to-value figures are the windscreen (they tell you about the loans being written this month).

So you can have a genuinely healthy back book and a much more rate-sensitive front book at the same time. Both numbers are true. They're just measuring different years.

What this actually means for you

If you're buying your own home, this is good news with a price tag attached.

Lenders are more willing to accept a smaller deposit than at any point in 17 years. But the deposit you bring still decides your rate.

As of yesterday, average two-year fixes looked like this: 5.75% at 95% LTV, 5.29% at 90%, 5.01% at 75%, and 4.69% at 60%.

That's a full percentage point between a 5% deposit and a 40% one. On a £250,000 mortgage, roughly £150 a month, every month, for two years. Your deposit isn't just a hurdle to clear. It's an ongoing cost.

If you're a landlord, read the other half.

Fewer buy-to-let mortgages means less competition for the kind of stock you're hunting. That's the upside.

The downside is what it does to supply. RICS reported this week that tenant demand rose while landlord instructions fell, pushing near-term rent expectations to +44, up from +33 last month.

Fewer landlords buying. More tenants competing. You can guess which way rents go.

And on prices? Nationwide says they're up 1.6% year on year. Lloyds says down 0.4%. That's the same month, two credible lenders, opposite directions. The official Land Registry figure lands on 16 September.

Which is a decent reminder that if your deal only stacks up because you picked the more optimistic index, you don't have a deal.

If you remember one thing, make it this

The story isn't "prices are falling" or "first-time buyers are back."

It's that housing leverage is changing hands. Owner-occupiers are borrowing more against less equity, while landlords borrow less.

So stress-test properly. Model your mortgage at +1% and +2%. Assume your valuation goes nowhere for three years. Build in real voids and real maintenance.

If the rent covers the costs without needing capital growth to show up, you've got something.

If it only works because prices "should" rise, you've got a spreadsheet with a hope in it.

Go and check which one you're holding. Then reply and tell me what you found — I read every one.