Moneyfacts’ recent UK Mortgage Trends Treasury Report reveals a substantial increase in small-deposit mortgage options. This is particularly relevant for investors with limited initial capital.
A Boost in 95% Loan-to-Value Deals
The report highlights a notable rise in the availability of mortgages with a 95% loan-to-value (LTV) ratio. These deals have reached a count of 254, marking the highest point since before the negative impact of the Liz Truss mini-Budget. This increase indicates a growing willingness among lenders to offer high LTV mortgages, which require smaller deposits from borrowers.
Record-High Options at 90% LTV
Similarly, the options for 90% LTV mortgages have also increased, reaching an all-time high of 709 deals since February 2022. This growth signifies enhanced access to financing for those who can afford a 10% deposit, expanding the pool of potential investors in the property market.
Overall Growth in Product Choices
The overall product choice in the mortgage market has seen a consistent month-on-month increase for four consecutive months. The total number of available mortgage options now stands at 5,678, the highest in over 15 years. The last time the market saw a higher number was in March 2008, with 6,192 products.
Increasing Shelf-Life of Mortgage Products
Another key finding is the rise in the average shelf-life of a mortgage product, now at 20 days, the longest since June 2023. This trend suggests a stabilizing market, giving investors more time to consider and choose suitable mortgage products.
Trends in Mortgage Rates
Mortgage rates, a critical factor in investment decisions, have also seen notable changes.
Decrease in Average Fixed Mortgage Rates
There’s been a consecutive three-month fall in average fixed mortgage rates across all LTV tiers for both two- and five-year fixed-rate deals. As of November, the overall average rates for two- and five-year fixed mortgages are 6.29% and 5.86%, respectively. The gap between these two rates has narrowed, indicating a more balanced market.
Rise in Standard Variable Rates
Conversely, the average ‘revert to’ rate, or Standard Variable Rate (SVR), has increased. At 8.19%, this rate is at its highest since Moneyfacts started keeping electronic records in July 2007. This rise is significant for investors planning long-term investments, as it affects the cost of mortgages after fixed-rate periods end.
Two-Year Tracker Variable Mortgage Rates
The report also notes a month-on-month decrease in the average two-year tracker variable mortgage rate, now at 6.15%. This decrease provides a more favorable environment for those considering tracker mortgages, which adjust with the Bank of England’s base rate.