The number of mortgage providers that include a maximum 95 per cent loan-to-value product in their range now stands at 60, up from 53 a year ago and 13 more than five years ago, according to Moneyfacts.
The increase in 95 per cent LTV products over the past 12 months has forced rates down. The average two-year fixed mortgage rate and average five-year fixed rate have decreased by 0.73 per cent and 0.71 per cent respectively over the past year.
A decade ago borrowers with a 5 per cent deposit had just three products from three mortgage providers to choose from. Today, they have a choice of 405 products, including 67 variable deals, from a total of 60 providers.
Moneyfacts finance expert Darren Cook says: “It is also no surprise that more than four-fifths (83 per cent) of mortgages available at maximum 95 per cent LTV are fixed rate mortgages – accounting for 338 products of the 405 currently available – as these deals enable borrowers to have the certainty of knowing their monthly repayment amount, which is perhaps of particular importance to those taking their first steps on the property ladder.
“There clearly seems to be a positive drive by mortgage providers to try and secure the business of potential first-time buyers, who are the lifeblood of the mortgage market and it is encouraging to see rates decrease because of this healthy competition. In the past year alone, the average two-year fixed rate mortgage rate has fallen by 0.73 per cent, while the average five-year fixed rate now stands 0.71 per cent lower.
“Despite the increase in the number of providers entering the higher risk LTV tiers – and the increase in product numbers as a result – the Financial Conduct Authority introduced clear affordability measures that mortgage providers must follow in the aftermath of the financial crisis, so potential first-time buyers will still need to jump through several affordability hoops before they will find themselves on the first rung of the property ladder.”