The number of mortgage deals available to borrowers with small deposits has climbed to its highest level in 17 years, according to the latest data from Moneyfacts’ UK Mortgage Trends Treasury Report.

The number of products available at 95% loan-to-value (LTV) rose to 442, the highest since March 2008 when 575 such products were on the market. The choice at 90% LTV also rose to 845, its highest since the same month in 2008, when 957 products were available.

Overall, the total number of mortgage products rose to 6,870, a year-on-year increase from 6,307 and the highest since October 2007, when the market offered 7,421 options.

While product choice expanded, average mortgage rates continued to edge down, albeit at a slower pace than in previous months. The average two-year fixed rate dropped by 0.07% to 5.32%, and the average five-year fixed fell by 0.04% to 5.18%. These decreases compare to more significant drops in the previous month, when the two- and five-year rates fell by 0.13% and 0.10%, respectively.

The average shelf-life of a mortgage product also lengthened, rising to 21 days from 16 days in March.

FIVE-YEAR COST

Year-on-year, five-year fixed rates have declined by 0.21%, from 5.39% in April 2024. Two-year fixed rates have fallen more sharply, down by 0.48% from 5.80% over the same period. The current 0.14% difference between two- and five-year fixed rates is the narrowest gap since the inversion began in October 2022.

Meanwhile, the average two-year tracker variable mortgage rate increased slightly to 5.20%. The average standard variable rate (SVR) fell to 7.60%, down from a recent peak of 8.19% in November and December last year.

Rachel Springall, spokesperson at Moneyfacts, said the increasing availability of low deposit mortgages will be a welcome development for those looking to remortgage or step onto the property ladder.

“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,” she said.

“However, there is still much more room for improvement, particularly as the choice of deals at 95% loan-to-value represents just 6% of all deals available to borrowers across fixed and variable mortgages.”

Springall suggested that the recent end of Stamp Duty Land Tax relief may have encouraged lenders to expand their product ranges to attract new business. She also pointed to a modest improvement in affordability for low-deposit borrowers, noting that the average two-year fixed rate for borrowers with a 5% deposit has fallen to 5.81%, the lowest since October 2022.

With the Bank of England holding the base rate steady in March and another decision not due until May, the average shelf-life of mortgage products has stabilised. Springall said the market remains sensitive to swap rate movements, which could prompt further rate reductions even in the absence of a base rate cut.

“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%,” she added.

“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.”