But fixed rates are only slightly lower than a year ago
The number of mortgage deals available at 95% loan-to-value (LTV) has reached its highest level in nearly five years, according to the latest Moneyfacts UK Mortgage Trends Treasury Report.
According to the report, 388 mortgage products were available at 95% LTV in February, the highest since March 2020, when there were 391 deals. Despite this increase, overall product choice fell month-on-month to 6,451, though this remains significantly higher than the 5,787 options available a year ago.
The average shelf-life of a mortgage product increased from 21 days in January to 36 days in February, suggesting a period of relative stability in the market. However, average fixed mortgage rates edged higher, with two- and five-year fixed rates rising by 0.04% and 0.07%, reaching 5.52% and 5.32%, respectively. The difference between the two- and five-year fixed rates narrowed to 0.20%, the smallest margin since January 2023.
Tracker mortgage rates showed a slight decline, with the average two-year tracker variable rate dropping to 5.46%. The average standard variable rate (SVR) also fell to 7.78%, down from the recent peak of 8.19% recorded in November and December 2023.
“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,” said Rachel Springall (pictured), finance expert at Moneyfacts. “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 noted that while product availability had declined overall, the increase in average mortgage shelf-life was expected due to the typical slowdown in lender activity over the festive period.
She also pointed to ongoing calls for lenders to do more to support first-time buyers, which could lead to increased innovation in the sector. However, existing regulations — such as limits on high loan-to-income lending — continue to pose challenges for lenders.
“There has been a drop in swap rates over the past few weeks, but it can be a slow and steady process for lenders to move in the same direction,” Springall added. “Borrowers may then be disheartened to know that fixed rates are not too dissimilar to what they were a year ago, with longer-term fixed rates somewhat higher.”
Looking ahead, she cautioned that inflationary pressures could reduce the likelihood of further base rate cuts, which would impact borrowers looking to remortgage this year.
“This will frustrate the millions of borrowers looking to remortgage in 2025 who plan to secure a fixed rate mortgage for peace of mind,” Springall said. “After all, it remains the case that a fixed mortgage is much more affordable than falling onto a standard variable rate, so borrowers about to come off a cheap deal must seek independent advice with urgency to assess the latest mortgages available to them.”
Want to be regularly updated with mortgage news and features? Get exclusive interviews, breaking news, and industry events in your inbox – subscribe to our FREE daily newsletter. You can also follow us on Facebook, X (formerly Twitter), and LinkedIn.
