According to the latest figures from Moneyfacts, the 95% mortgage market tripled in the last month. At the start of May there were 112 mortgage deals requiring just a 5% deposit whereas at the start of April there were just 34.
Last month we saw the introduction of the Mortgage Guarantee Scheme – the aim of the scheme was to encourage banks to reintroduce high LTV mortgage products after they were largely withdrawn from the market as a result of the pandemic. The scheme enables buyers to purchase a property up to the value of £600,000 with just a 5% deposit and is available to all buyers not just those purchasing their first home. However, buyers using the scheme do need a very good credit rating and many of the 95% mortgages are not available to new-build buyers.
Although there are currently 112 banks offering 95% mortgages, only 40 are using the Mortgage Guarantee Scheme indicating that confidence in returning to low deposit lending has vastly increased and that the scheme was seen as a sign of confidence in the property market, while some lenders decided to launch low LTV products independently from the scheme. In addition to the 95% mortgages, there were also 41 new products launched for 90% mortgages bringing the current total to over 480 compared to just 100 this time last year. Comparing the number of available mortgage products, it is currently around three quarters of pre-pandemic levels. For those with a 20% deposit, there has been an 18% increase in products available compared to the same time last year.
Across all types of mortgages, interest rates are still historically low and borrowers with big deposits can fix for five years at 1.27%. The Bank of England has shown that net mortgage borrowing in March reached the highest level ever recorded. Moneyfacts has reported that the number of residential mortgages increased for the seventh consecutive month in May, while the average two-year fixed rate dropped very slightly to 2.57 per cent while the average five-year fixed rate increased very slightly to 2.79 per cent.
Finally, more good news – deals are on the market for longer with the average shelf-life of a mortgage deal increasing by three days to 32 in April giving buyers longer to secure the right home and mortgage product.
Talk to us at The Mortgage Hub if you would like to find out more about securing a high LTV mortgage. We can scour the whole of the market to find deals that you may not have access to from high street lenders, and can advise you on the best deal for your individual circumstances.