The average loan-to-value ratio on UK mortgaged properties has decreased to 59%, down from approximately 70% in 2012, according to data from the Intermediary Mortgage Lenders Association (IMLA).
IMLA’s report, The New Normal – prospects for 2026 and 2027, estimates that £677 billion in housing equity has accumulated since the financial crisis through mortgage repayments and property value increases. By 2024, around 42% of private homes carried a mortgage, with the remainder owned outright or with relatively low debt levels.
Market stability and interest rate sensitivity
The reduction in LTV ratios has decreased many borrowers’ exposure to interest rate fluctuations, contributing to market stability. However, IMLA’s Affordability Paradox 2025 report identifies a contrast between equity accumulation among existing homeowners and continued obstacles for new entrants.
An estimated 3.5 million potential first-time buyers remain outside the property market, according to the association’s findings. Many will require alternative mortgage products to achieve homeownership.
Access challenges
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.”
Davies noted that whilst higher-LTV products exist and development continues, lending standards must remain rigorous. “Higher-LTV lending must sit within disciplined affordability testing to ensure borrowing is sustainable over the long term,” she said.
Davies added that improving market access requires both product availability and enhanced awareness. “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.”
The data suggests a bifurcated market, with established homeowners benefiting from equity growth whilst prospective buyers face affordability constraints despite the availability of higher-LTV lending products.
