According to the Moneyfacts UK Mortgage Trends Treasury Report, there are 442 mortgages at 95% LTV – the most choice since March 2008, when there were 575 options. At 90% LTV, there are 845 deals, again the highest total since March 2008, when there were 957 products.
Mortgage choice for people with larger deposits also rose month-on-month, from 778 in March to 797 in April.
Overall, there were more options across the board in April compared to last month, with 6,870 mortgages available, up from 6,684 in March, 6,307 last year and 5,146 in April 2023.
This was also the highest number of mortgages on the market since October 2007, which had 7,421 options.
The average shelf life of a mortgage rose too, from 16 days in March back to 21 days in April – similar time spans seen both last year and in 2023.
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Lenders aiming to attract new business
Rachel Springall, finance expert at Moneyfacts, said: “The flourishing choice of low-deposit mortgages will no doubt be welcomed by borrowers who are either looking to remortgage or are a first-time buyer. The Government has been clear that it wants lenders to do more to boost UK growth, and so a rise in product availability for aspiring homeowners is a healthy step in the right direction. However, there is still much more room for improvement, particularly as the choice of deals at 95% LTV represents just 6% of all deals available to borrowers across fixed and variable mortgages. The end of stamp duty land tax (SDLT) relief last month could also be playing its part to incentivise lenders to push out more deals to entice new business.”
Springall added: “Throughout March, there was minimal movement to swap rates, which spelled a stable situation on the average shelf life of a mortgage, rising to 21 days from 16 a month prior. This stability was further enhanced by a hold to the Bank of England base rate during March, with another announcement now not due until May. There are numerous murmurings of a potential cut to surface in the coming months, but this could be delayed if inflation gets out of control. However, borrowers dissatisfied by a lack of cuts would be wise to keep in mind that lenders can reduce rates regardless of base rate moves. If the swap rate market plummets, this usually gives lenders a reason to slash their ranges in response.”
Mortgage rates continue to decline
Mortgage rates are down on both an annual and monthly basis, with two-year fixed rates at an average of 5.32% and five-year fixed rates at 5.18%. This was down from 5.39% and 5.22% in March respectively, and 5.8% and 5.39% a year ago.
The gap between a two- and a five-year fixed rate is currently 0.14%, the smallest difference since October 2022 – the first time that five-year fixes became cheaper than two-year terms.
At 95% LTV, the average two-year fixed rate was 5.81%, down slightly from 5.83% in March and notably lower than 6.03% in April last year. For a five-year fix, the average rate was 5.62% this month, compared to 5.63% in March and up compared to 5.53% last April.
At 90% LTV, the average rate for a two-year fixed mortgage was 5.59%, down from 5.69% in March and higher than the average of 5.49% a year earlier. For a five-year fixed deal at this tier, the average rate was 5.33% as of April, lower than the average of 5.4% in March. This was also down on the typical rate of 5.49% in April 2024.
For a 60% LTV deal, the average two-year fixed rate fell from 4.86% in March to 4.79% in April and was lower than the typical rate of 5.29% last year.
Meanwhile, the average five-year fixed rate at this bracket was 4.69% this month, slightly higher than the 4.68% average in March and lower than the 4.95% average in April.
The average standard variable rate (SVR) across all LTVs was 7.6% in April, compared to 7.68% in March and 8.18% last year.
The typical two-year tracker rate was 5.2%. Despite the base rate hold last month, this was marginally higher than the average of 5.18% in March. However, it was cheaper than the average of 6.14% in April last year.
Springall added: “Mortgage affordability for borrowers with small deposits has also improved month-on-month, as there has been a drop in rates. The average two-year fixed mortgage rate for borrowers with a 5% deposit at 5.81% is its lowest point in over two years.
“Fixed mortgage rates are down year-on-year, and slowly the market is seeing the average two-year fixed getting closer to its five-year counterparts, now with a rate gap of just 0.14%. Since October 2022, the average two-year fixed rate has been higher than the five-year rate. It seems an end to such inversion could be coming, but this does largely depend on how swap rates will move in the coming weeks. These moves make it essential for borrowers not to delay finding a new deal, particularly if they are sitting on a revert rate. However, with the lowest rate mortgages grabbing the headlines, it’s vital borrowers seek advice to find the most appropriate package for them, and not just be swayed by the initial rate.”
This article was first published on YourMoney.com‘s sister site, Mortgage Solutions. Read: Options for low-deposit mortgages hit 17-year high – Moneyfacts
