Britain’s biggest mortgage lender has launched a new deal allowing first-time buyers to get on the property ladder with just a £5,000 deposit – as banks step up efforts to revive the housing market with lower rates.

Lloyds Banking Group, which incorporates Halifax, said the move would open the door to home ownership for thousands who can afford monthly repayments but are locked out by the huge upfront costs of buying. It comes amid a wave of recent mortgage rate cuts from major lenders designed to support first-time buyers, as competition intensifies and expectations grow for further base rate reductions this year.

A foot on the ladder with just £5,000

Under the new deal buyers can purchase a property worth up to £300,000 with a minimum deposit of just £5,000 – equivalent to a 98% loan-to-value (LTV) mortgage. The product, available through Lloyds Bank and Halifax as well as brokers, will launch on May 18 with a five-year fixed rate of 5.89%.

It is aimed squarely at renters who are already shouldering high monthly housing costs but struggle to save tens of thousands of pounds without help from family.

Lloyds said it expects the scheme to deliver an extra £500m of lending to first-time buyers over the next year.

Why are rates easing now?

The launch comes as lenders have been trimming mortgage rates in recent days, with a number of high street banks cutting fixed deals to make borrowing more affordable.

These reductions – alongside fierce competition for new customers – are part of a broader push to help first-time buyers, who have been squeezed by high living costs and rising rents.

Despite this, the deposit hurdle remains the biggest barrier.

Around 64% of aspiring buyers say saving for a deposit is the hardest part of purchasing a home, while only about 40% can rely on family support.

Key features of the new mortgage include:

• Minimum deposit: £5,000
• Maximum LTV: 98%
• Interest rate: 5.89%
• Fixed term: 5 years
• Loan-to-income cap: 4.5x
• Term: up to 40 years
• Fees: none

Strict affordability and credit checks will apply, and the deal is not available for new builds, shared ownership or those using gifted deposits.

Rent vs mortgage: the reality check

Lloyds says the product reflects a growing trend where mortgage repayments are increasingly similar to – or even cheaper than – rents.

In Manchester, one of the UK’s most popular cities for first-time buyers:

• Average first-time buyer property: £236,000
• Monthly mortgage (with £5,000 deposit): about £1,300
• Average rent: £1,347 per month

Over five years, a buyer could build around £11,500 in equity, even if house prices do not rise.

Buyers stuck in a savings trap

Today’s first-time buyer is now aged 32 on average – two years older than a decade ago. While 63% of would-be buyers have already saved more than £5,000, some 58% believe they need over £20,000 before they can realistically buy.

By slashing the upfront requirement, lenders hope to cut years off that timeline.

Amanda Bryden, head of mortgages at Lloyds, said: “We hear time and again from those who are doing everything right… but still feel locked out of home ownership because saving a big enough deposit seems impossible. By cutting the upfront cost to £5,000 we’re breaking down a major barrier.”

Regional house prices snapshot

The affordability challenge varies sharply across the UK. Here is how average first-time buyer property prices compare:

Region	Price10
East Midlands	£204,687
Eastern England	£274,631
Greater London	£464,646
North East	£143,928
North West	£201,120
Northern Ireland	£195,981
Scotland	£168,793
South East	£302,396
South West	£241,949
Wales	£198,283
West Midlands	£219,581
Yorkshire and the Humber	£173,720

Source: Halifax House Price Index, March 2026

The new deal underlines a shift in the mortgage market, with lenders increasingly targeting first-time buyers through a mix of lower rates and innovative low-deposit products.

But while deals like this could help thousands step onto the ladder sooner, borrowers are still being warned to weigh up the risks of high LTV mortgages – particularly if house prices fall.

Rachel Geddes, Strategic Lender Relationship Director, Mortgage Advice Bureau said: “It’s hugely encouraging to see a major high street lender making such a significant commitment to supporting first time buyers. Unlocking up to £500m in additional lending, alongside a £5,000 deposit option, is a positive step towards breaking down some of the barriers preventing aspiring homeowners from getting onto the property ladder.”

Jamie Alexander, Mortgage Director at Romsey-based Alexander Southwell Mortgages, said it was encouraging to see a lender of Lloyds’ size targeting this market.

But he warned: “The £300,000 purchase price cap is worth noting, though. For buyers in many parts of the UK that’s workable, but in London and the South East it will put a significant chunk of the market out of reach, which is arguably where the deposit struggle is felt most acutely.

Britain’s most dynamic names in property and construction were honoured this week at the Sunday Express Construction and Property Awards. Broadcaster Kate Garraway hosted the glittering celebration of excellence which saw Legacie emerge as the night’s standout winner.

It took home Property Developer of the Year for its projects across the North West, including Liverpool’s Parliament Square regeneration scheme. The company’s success at the Manchester event was further cemented when founder and CEO John Morley was named Male Property Champion.

Building giant Barratt Redrow was named Housebuilder of the Year, recognised for its industry-leading standards, build quality and continued delivery of high-quality homes across the UK.

Construction excellence was also in the spotlight, with G&G Joinery taking home Contractor of the Year for its track record in project delivery and commitment to innovation and health & safety.

Finance played a central role in the awards, with Close Brothers Group named Best Property Lender, recognised for its flexible approach to development finance and support for ambitious residential and commercial schemes.

Samantha Palin of Prospect Homes received a rousing ovation when she was named Female Property Champion of the Year. Her leadership, commitment to diversity, and influence in the housebuilding sector were praised as a benchmark for others.

Demonstrating the strength of the next generation of talent, Nexus Residential took home both Residential Property Developer of the Year and Innovator of the Year, recognised for its environmentally conscious approach to housing and commitment to low-carbon building design.

Meanwhile, Jarron Developments was named Build-to-Rent Developer of the Year, applauded for its role in rejuvenating a derelict site and transforming it into a £120million mixed-use scheme. CERT Property was recognised with Best Proposed Regeneration Scheme for its 35-storey tower in Salford Quays.

The awards also celebrated innovation in energy, with Next Energy Solutions winning the coveted Retrofit Project of the Year for its nationwide work delivering solar and renewable systems.

Global investment powerhouse RWinvest was crowned Investment Agency of the Year, praised for its strategic market insight and ability to secure major property investment deals.

Kate Garraway said: “This was an incredible evening, full of ambition, achievement and truly inspiring stories. The companies and individuals recognised here tonight are helping to shape the very skylines of our country – and doing it with purpose, innovation and heart.”

Express editor-in-chief Tom Hunt spokesperson added: “We’re proud to shine a light on the businesses and leaders that make Britain’s construction and property sectors so resilient, forward-thinking and inclusive. These awards celebrate those raising the bar across the industry – from development and finance to sustainability and leadership.”

Other winners included Ai Law and MSB Solicitors, who were jointly named Legal Team of the Year, while DIY giant Wickes took home the Outstanding Supplier Award alongside Warwick North West.

A poignant moment came as Jimmy Hassall, founder of J&J Bricklayers, received a standing ovation upon being awarded the Lifetime Achievement Award, honouring a decades-long contribution to the industry.

Property Developer of the Year

Legacie

Residential Property Developer of the Year

Nexus Residential

Construction Business of the Year

Eric Wright Group

The Barratt Redrow Outstanding CSR Award

Frank Rogers

Outstanding Commitment to ED&I

RWinvest

Female Property Champion of the Year

Samantha Palin (Prospect Homes)

Male Property Champion of the Year

John Morley (Legacie)

Real Estate Agency of the Year

Quay Property

Outstanding Supplier of the Year Award

Wickes & Warwick North West

Architecture Business of the Year

Hodder+Partners

Legal Team of the Year

MSB Solicitors & Ai Law

Property Deal of the Year

Jarron Developments, Metalworks

Investment Agency of the Year

RWinvest

Consultancy Team of the Year

Tyler Grange

Innovator of the Year

Nexus Residential

Best Property Marketing Campaign

Centurion Village, Barratt Redrow

House Builder of the Year

Barratt Redrow

Development of the Year

Parliament Square, Legacie

Contractor of the Year

G&G Joinery

Retrofit Project of the Year

Next Energy Solutions

Best Property Lender

Close Brothers Group

Build to Rent Development of the Year

Jarron Developments, Metalworks