Since the lockdown, borrowers who needed to borrow as much as 85% or 90% of the value of their home have suffered from a lack of mortgage options.
But the return this part of the market by some big name lenders such as TSB, Yorkshire Building Society and Atom bank recently has meant the number of 90% loan-to-value (LTV) deals have now risen from 56 to 88 in the last month.
What’s more, those looking for a slightly smaller 85% LTV deal, now have the benefit of 396 new deals, compared to 344 in November.
Although this will come as positive news to anyone with a small deposit or lower equity keen to make a purchase before the stamp duty holiday deadline on 31 March 2021, not all borrowers will be celebrating.
For the figures, which were released today by Moneyfacts.co.uk, also showed the number of 95% LTV deals had actually fallen in the last month from 12 to eight.
What’s more, the interest rates on two-year fixed-rate deals – which tend to be the most popular choice amongst buyers – have also increased slightly.
Five-year fixed-rate deals, however, had experienced slight drops in rates since last month, Moneyfacts.co.uk revealed.
Eleanor Williams, finance expert at Moneyfacts, said the growth in products 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.
She added: “22% of the new mortgages have been launched in the 85% and 90% LTV tiers. This positive movement at the 90% LTV in particular has been fuelled by a number of providers such as TSB, Yorkshire Building Society and Accord, among others, returning further deals to the market, which will no doubt come as great news to those with a smaller deposit/equity, who will have likely felt they had limited options open to them of late.
“This also indicates that lenders are continuing to assess their ranges to meet demand. Indeed, a number of the building societies launched deals for borrowers in their local areas, and Nationwide has indicated that it too will be increasing access to its 90% LTV products; moves that may hopefully encourage more lenders to follow suit in the coming weeks.”
Getting advice is essential
Williams added: “With no guarantee that rates will not continue to climb, those hoping to proceed with a mortgage soon would be well advised to secure the support and knowledge of a qualified independent adviser to enable them to search for the best product for their circumstances.”
| Mortgage market analysis | |||||||
| Dec-19 | Mar-20 | Jun-20 | Jul-20 | Nov-20 | Dec-20 | ||
| Fixed and variable rate products | Total product count – all LTVs | 4,966 | 5,222 | 2,810 | 2,728 | 2,404 | 2,782 |
| Product count – 95% LTV | 386 | 391 | 31 | 14 | 12 | 8 | |
| Product count – 90% LTV | 765 | 779 | 183 | 70 | 56 | 88 | |
| Product count – 85% LTV | 668 | 664 | 286 | 356 | 344 | 396 | |
| All LTVs | Average two-year fixed rate | 2.44% | 2.43% | 2.02% | 1.99% | 2.43% | 2.49% |
| Average five-year fixed rate | 2.74% | 2.74% | 2.26% | 2.25% | 2.70% | 2.69% | |
| 95% LTV | Average two-year fixed rate | 3.25% | 3.26% | 3.28% | 3.94% | 4.74% | 4.44% |
| Average five-year fixed rate | 3.57% | 3.58% | 3.48% | 3.46% | 4.21% | 3.97% | |
| 90% LTV | Average two-year fixed rate | 2.62% | 2.57% | 2.30% | 2.90% | 3.76% | 3.79% |
| Average five-year fixed rate | 2.94% | 2.91% | 2.57% | 3.16% | 3.98% | 3.92% | |
| 85% LTV | Average two-year fixed rate | 2.48% | 2.49% | 2.09% | 2.11% | 3.12% | 3.17% |
| Average five-year fixed rate | 2.81% | 2.81% | 2.32% | 2.34% | 3.25% | 3.26% | |
| Data shown is as at the first available day of the month, unless stated otherwise.
Source: Moneyfacts Treasury Reports |
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