One in seven first time buyers has taken out a potentially risky mortgage this year, the highest proportion since the financial crisis.
Across the UK, 14.2% of first time buyer loans in the first half of the year were based on a high income multiple and low deposit, putting borrowers at risk of struggling to repay their loans if interest rates rise.
A total of 18,723 mortgages were approved in the first six months of 2015, according to figures, released through a Freedom of Information request to the Financial Conduct Authority.
The proportion of first time buyer loans that are potentially risky is at its highest since 20.6% of loans were advanced on this basis in 2008, at the height of the financial crisis. They dropped to just 1.7% of first time buyer loans in 2011.
What counts as risky?
High income multiple, low deposit mortgages are defined by the FCA as a combination of borrowing 3.5 or more times a single income or 2.75 times a joint income and borrowing 90%+ of the homes value.
High house prices, low interest rates and Help to Buy may be behind the revival in popularity of the loans.
First time buyers in the UK are 2.5 times more likely to take out a high risk mortgage, with 14.2% taking out a high income multiple, low deposit loan in the first half of 2015, compared to 5.8% of all mortgage lending.
In terms of all mortgage lending, high income multiple, low deposit loans now made up a higher proportion of the mortgage market than at any point since 2007, when they accounted for 7.4% of loans.
A loan worth more than the house