Compared to the previous month, there were 378 more deals on the market. 

This included the return of high loan to value (LTV) mortgages, as the number of 85% LTV products rose from 344 to 396 and 90% LTV deals increased to 88 from 56.  

This was the highest number of deals seen across these tiers since March and June respectively. 

Although some lenders have come back into the market with deals for those with a 10% deposit, the options for those with a smaller deposit of 5% has fallen. Moneyfacts recorded eight mortgages at 95% LTV in December, down from 12 last month. 

Overall, product availability is still 44% down on the 4,966 that were on the market this time last year, and significantly lower than the 5,222 mortgages on the market in March. 

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Eleanor Williams, spokesperson at Moneyfacts, said: “Echoing last month’s trend, the number of available mortgage deals has continued on an upwards trajectory, with a further 378 deals on offer now compared to November, the largest month-on-month increase in availability since November 2014.  

“This growth may be a reflection of lenders reacting to not only the level of pent-up demand from those looking to move following the first lockdown, but also the flood of would-be borrowers hoping to complete their new mortgage in time to benefit from the temporary stamp duty land tax holiday.”    

Rates rising 

The average rate of two-year fixes has also gone up, with the return of high LTV deals bringing the average to its highest point in five years. 

At 85% and 90% LTV, rates increased on a monthly basis by 0.05% and 0.03% to 3.17% and 3.79% respectively.  

According to Moneyfacts, these were the highest rates recorded since January 2015 and February 2015 respectively.   

Across all LTVs, the average rate for a two-year fixed stood at 2.49%, a monthly rise of 0.06% and an annual increase of 0.05%.

Borrowers who want to fix for a slightly longer period will be better off than they were previously, as the current average rate for these mortgages across all LTV tiers declined 0.01% to 2.69% since November and dropped 0.05% annually. 

However, the difference between the average two-year fixed and five-year fixed rate shrunk to 0.2% in December, the smallest gap since June 2013 when it was 0.17%. 

Williams said: “Lenders review their rates in light of many factors, and these increases may be a reflection of the fact that, while lenders are looking to cater to various borrower types with varying levels of equity or deposit, they also need to consider the still uncertain economic outlook in relation to new lending and need to protect their existing mortgage customers as well.  

“Improvements in availability are likely to be well received, particularly by those borrowers with the smallest deposits who may have been concerned that with low savings rates and increasing house prices, their homeownership dreams would have had to be shelved.”