Great news for homebuyers with a smaller deposit—the number of 95% loan-to-value (LTV) mortgage deals has reached its highest level since March 2020, according to the latest data from Moneyfacts. There are now 388 mortgage products available at this tier, showing increased lender confidence in the high-LTV market.
Mortgage Market Overview
While total mortgage product availability across all LTVs has slightly decreased month-on-month to 6,451 options, this is still a significant increase compared to last year’s 5,787 choices.
Another key trend is the longer shelf-life of mortgage products, which has now extended to 36 days, up from 21 days last month. This suggests that lenders are making fewer rapid changes to their offerings, providing a more stable environment for borrowers.
Mortgage Rate Trends
The average fixed mortgage rates have shown some movement:
📈 Two-year fixed rate: 5.52% (+0.04% from last month)
📈 Five-year fixed rate: 5.32% (+0.07% from last month)
At the start of February 2024, the average five-year fixed rate stood at 5.18%, meaning rates have edged up by 0.14%. However, the two-year fixed rate has actually dropped slightly over the same period, from 5.56% to 5.52%.
Interestingly, the gap between two- and five-year fixed rates is now just 0.20%, the narrowest margin since January 2023. This could encourage borrowers to consider longer-term security when choosing their next mortgage deal.
For those on tracker or variable rates, the news is more positive. The average two-year tracker mortgage has dipped to 5.46%, while the standard variable rate (SVR) has fallen to 7.78%, down from its peak of 8.19% in late 2023.
What This Means for Borrowers
Rachel Springall, finance expert at Moneyfacts, highlights that the growth in 95% LTV mortgage deals is encouraging for first-time buyers, but there is still room for further expansion in this sector. Currently, these high-LTV products make up just 6% of all available mortgage deals.
With ongoing discussions about loosening lending rules to support first-time buyers and stimulate economic growth, we could see further innovation in mortgage products this year. However, lenders continue to operate within regulatory constraints, such as loan-to-income caps, which may limit flexibility at higher LTV levels.
For remortgagers, the outlook remains mixed. While swap rates have fallen recently, mortgage lenders have been slow to pass on reductions. Additionally, with inflation expected to rise in the coming months, the likelihood of multiple Bank of England base rate cuts is uncertain. This could mean continued frustration for borrowers looking to secure a competitive fixed-rate mortgage in 2025.
What Should You Do Next?
If you’re a first-time buyer or looking to remortgage, now is the time to explore your options. With rates fluctuating and more 95% LTV deals available, seeking expert mortgage advice can help you secure the best possible deal for your situation.
📩 Get in touch today to discuss your mortgage options!
This article includes insights and data sourced from Financial Reporter.
