There are now 22 providers offering 109 RIOs, up from 74 deals available in February 2020, according to Moneyfacts.
The boom in competition is good news for later life borrowers – especially those with interest-only mortgages set to mature in the coming years, the financial website added.
The average interest rate on the mortgages is 3.59 per cent, up by 0.12 per cent a year ago, Moneyfacts found.
Eleanor Williams, spokeswoman at Moneyfacts, said: “There has been an increase of 35 deals since February 2020, which includes a rise of 22 since September. The number of providers that now offer RIOs is now at a high of 22, with an addition of three since the start of 2021.
“The average rate for RIO deals has also made incremental moves downwards in recent months, and at 3.59 per cent has dropped by 0.02 per cent since November.
“While these changes seem small, these facts are notable for two reasons; first, RIO mortgages are a niche product with perhaps few borrowers for whom they are an appropriate option and make up only a small percentage of mortgage products overall, so any slight positive change impacts the sector.
“Second, providers withdrew swathes of mainstream mortgage products last year and choice remains considerably below that seen prior to the onset of the pandemic. These positive shifts in both the number of lenders and RIO deals are therefore great news for older borrowers.”
It’s thought around 40,000 interest-only mortgages will mature each year between now and 2032 with the borrower aged 65 and over.
Williams added: “Improvements in provision for those who are concerned about their access to appropriate mortgage products as they come to end of their existing interest-only deal are likely to be well received.
“Overall, it is inherently positive that those considering a RIO mortgage now have not only a greater choice of products, but also from a greater choice of lenders.”