The ongoing first‑time buyer mortgage price war is putting the spotlight firmly on deposit requirements and client affordability, creating new challenges and opportunities for brokers. According to Key Partnerships, these competitive conditions are also driving an increased use of later-life lending via the “Bank of Family”, as more clients look to family support to bridge deposit gaps.
For advisers, understanding how these market shifts affect sourcing, strategy, and client outcomes is essential, from assessing affordability to guiding clients through alternative funding routes, ensuring they can navigate this rapidly evolving landscape with confidence and clarity.
Santander has become the first mainstream mortgage lender to offer a 98% LTV mortgage for first-time buyers which is fixed for five years at 5.19% and requires a £10,000 deposit with other major lenders expected to follow. Increasingly lenders are offering as much as six times salary for customers.
Key Partnerships is predicting more interest from Bank of Family advisers, and their customers, looking to gift to first time buyers so that they can boost deposits they have already saved and cut LTVs and rates and expects growing interest.
First-time buyers with 5% deposits can pay between 4.2% and 6% for mortgages depending on the length of the term. However they only have, according to Moneyfacts data, 379 products to choose from. That rises to 905 if they have a 10% deposit with rates as low as 3.78%.
However customers with a 20% deposit can choose from 2,127 products and benefit from rates as low as 3.6% while those with a 40% deposit have 3,445 products to select from and see rates as low as 3.45%.
Key Partnership’s data shows nearly two out of three (63%) equity release customers use housing wealth across a range of purposes reflecting how modern lifetime mortgages are a multi-use product, supporting the needs of a broad profile of customers and rapidly becoming a key part of financial planning.
Equity Release Council data for 2025 shows the average amount released was £123,174 demonstrating the capacity of the Bank of Family to help with property purchases. However Santander says its average first time buyer put down a deposit of £85,000 last year demonstrating the limits of the Bank of Family.
Damon O’Connell, Director at Key Partnerships, said: “The first time buyer market is a key part of the mainstream mortgage market accounting for nearly a third of all lending and is clearly important to advisers in the sector and lenders as shown by the launch of new targeted products.
“Raising a deposit is however challenging for many first time buyers as demonstrated by the size of the deposits required. Many first time buyers will be quite rightly tempted by 98% or 95% LTV mortgages as they mean less time saving. Yet, even if affordability criteria can be achieved, the monthly costs of servicing these mortgages can create challenges and impinge on lifestyle objectives or the ability to contribute to pensions or other investments.
“Increasingly we are seeing the Bank of Family using their property wealth not to fund an entire deposit as that will affect other financial goals but to help supplement deposits already saved so that their children or grandchildren can secure a lower LTV mortgage and a lower rate.
“Advisers taking that approach are showing a commitment to holistic advice and exploring how family wealth, particularly in respect of property, can be used efficiently across the generations.
“Mainstream mortgage advisers need to expand their fields of vision to consider how later life lending products, including modern lifetime mortgages which include repayment options and flexible early repayment terms, can support both their older customers and first time buyers. A referral relationship with a trusted partner such as Key Partnerships can ensure opportunities are not missed, support the development new income streams and help deliver good customer outcomes aligned to Consumer Duty obligations.”
