No-Deposit Mortgages Return as Housing Crisis Deepens for First-Time Buyers

As new lenders introduce 100% mortgages for first-time buyers, industry experts express mixed reactions about the return of no-deposit home loans to the British property market. These products aim to address the mounting challenges faced by Generation Rent, though some observers draw concerning parallels to pre-2007 lending practices.

Gable Mortgages has become the second lender in 2025 to launch a no-deposit mortgage product, following April Mortgages’ similar offering last week. The move marks a significant shift in the market, where most lenders typically require at least a 5% deposit.

Justin Le Roux, chief executive of Gable Group, highlights the rationale behind the new product: ‘There is a whole generation of renters out there who are struggling to save to buy and pay their rent at the same time. This has made it significantly harder for first-time buyers, especially key workers get onto the property ladder.’

The Growing Deposit Challenge

Recent data from Halifax reveals the scale of the challenge, with the average first-time buyer deposit now reaching £53,414 – a 67% increase over the past decade. According to Lloyds Banking Group research, only 8% of non-homeowners aged 25-34 have sufficient savings for a 10% deposit on the average first-time buyer property in their region. This trend has led many to question whether the British obsession with home ownership pays off.

Costs and Considerations

The new offerings present both opportunities and risks for aspiring homeowners. Gable’s standard mortgage offers a five-year fixed rate of 5.95%, while their new-build option stands at 5.65%. These rates exceed those available to buyers with deposits – Monmouthshire Building Society offers a five-year fix at 4.75% for those with a 5% deposit.

For a £200,000 mortgage over 30 years, monthly payments would be £1,193 on Gable’s standard no-deposit product, compared to £1,043 with Monmouthshire’s 5% deposit mortgage. As mortgage rates continue to fluctuate, these differences in monthly payments become increasingly significant for buyers.

Industry Perspectives

Industry professionals remain divided on the merits of these products. Kylie-Ann Martin, mortgage broker at KAG Financial, sees potential benefits: ‘I truly believe there is a place for 100% mortgages, if they are regulated in the right way. We speak to many people paying huge amounts of rent that would see a considerable reduction in costs when comparing this to a mortgage.’

However, Kundan Bhaduri of The Kushman Group warns of potential risks, drawing parallels to past market instability: ‘Gable and April Mortgages’ zero-deposit products bear striking resemblance to Northern Rock’s pre-2007 folly that culminated in Britain’s first bank run since 1866 and left millions in negative equity.’

Product Details and Restrictions

The products come with notable restrictions and costs. Gable requires borrowers to be at least 23 years old and borrow a minimum of £125,000. Their fee structure is significantly higher than market norms, ranging from £2,095 for properties worth £125,000-£200,000 to £9,995 for homes valued between £800,000 and £1 million.

For key workers in certain professions, Gable offers enhanced borrowing capacity of up to 5.5 times salary, compared to the standard 4.49 times. This means a key worker earning £40,000 annually could potentially purchase a property worth £220,000 without savings.

As housing market stability continues to evolve, these new mortgage products represent an attempt to address affordability challenges. However, prospective buyers must carefully weigh the higher costs and potential risks against the immediate benefit of homeownership without a deposit.