The availability of deals at the 95% loan-to-value tier rose to 388, now at its highest point in almost five years since March 2020.
This is according to the latest Moneyfacts UK Mortgage Trends Treasury Report, which also shows that the average shelf-life of a mortgage product rose to 36 days, from 21 days a month ago.
Product choice overall fell month-on-month, to 6,451 options, however product numbers are substantially higher than a year ago (5,787).
Average mortgage rates on the overall two- and five-year fixed rates rose by 0.04% and 0.07% to 5.52% and 5.32% respectively.
At the start of February 2024, the average five-year fixed rate was 5.18%; compared to the start of this month, the rate is 0.14% higher at 5.32%. However, the average two-year fixed rate has fallen by 0.04% over the same period, down from 5.56% to 5.52%.
The average two-year fixed rate is 0.20% higher than the five-year equivalent but the gap is at its lowest margin since January 2023 (0.16%). The two-year fixed rate has now been higher than the five-year equivalent since October 2022.
The average two-year tracker variable mortgage rate fell to 5.46%.
The average ‘revert to’ rate or Standard Variable Rate (SVR) fell to 7.78%. In comparison, the highest recorded was 8.19% during November and December 2023.
Commenting on the latest figures Moneyfacts finance expert Rachel Springall said:
“Borrowers with a limited deposit may find it encouraging to see a growth in choice for mortgages available at 95% loan-to-value, now at its highest count in almost five years. This is positive to see, but there is still lots of room for more deals to be pushed out in this area of the market as it represents just 6% of all deals available to borrowers across fixed and variable mortgages.”
Springall said that lenders had been urged to do more to support first-time buyers, to boost growth in the economy, thus the debate on the loosening of lending rules. Therefore, she said there was an expectation for more products and innovation to emerge this year.
“However, the current rules will continue to pose a challenge for lenders to do more, as has been the case for the past 10 years where regulatory recommendations stipulate loan-to-income ratios of 4.5 or more do not exceed 15% of a lender’s new lending.
“Until lenders see a relaxation to these rules, some will have no choice but to pose limitations on those borrowing at higher loan-to-value tiers. Regardless of whether these rules change or not, there will be borrowers hoping to finish up their purchase before the stamp duty deadline at the end of March 2025.”
