Moneyfacts data showed however the average rates for those with smaller deposits or levels of equity have fallen, with the average two- and five-year fixed rates at a high loan-to-value (LTV) of 95 per cent currently at record lows going back to 2011.
At 5,315, the total number of products available in the residential mortgage sector have risen to the highest since March 2008 at 6,192 available and borrowers now have more choice than they did pre-pandemic with figures from March 2020 at 5,222 products.
Two and five-year average rates increase
For the second consecutive month, the two and five-year overall average fixed rates have both increased, each by 0.05 per cent to 2.34 per cent and 2.64 per cent respectively. This has again been driven by further increases in the average rates in the lower LTV tiers.
Those with smaller deposits or levels of equity saw improvements in the extent of choice on offer to them; rising by a further 76 deals this month, the proportion of the market where products at 90 per cent LTV and above are available rose to over 20 per cent for the first time since March 2020.
Average two and five-year fixed rates at 95 per cent LTV fell for the eighth consecutive month. At 3.09 per cent and 3.39 per cent respectively, these averages are the lowest on Moneyfacts records since 2011.
Eleanor Williams, spokesperson at Moneyfacts, said: “December sees the number of mortgage products on offer rise by 159 to reach 5,315, a level not reached since we recorded 6,192 products on offer in March 2008.
“Availability has now eclipsed that which was offered prior to the onset of the pandemic in March 2020 (5,222) and demonstrates a robust level of recovery in the residential sector.
Raft of choice
“We recorded improvements in the level of choice across the majority of the LTV brackets but most markedly at 90 per cent and 95 per cent LTV where the number of products rose by 39 and 37 products respectively,” continued Williams. “While the number of options for borrowers considering deals in these brackets remains slightly below that recorded in December 2019, when compared year-on-year the improvement is clear.
Moneyfacts confirmed the overall average LTV reached 78.83 per cent – the highest recorded since May 2019 at 78.91 per cent.
“Echoing the trends we noted last month, despite increases in the rates across most of the lower LTV sectors fuelling 0.05 per cent month-on-month rises in overall average fixed rates, is the fact that at the top of the LTV spectrum average rates have dropped again.
“Borrowers with a 10 per cent deposit or equity will find that, following monthly reductions of 0.03 per cent and 0.07 per cent the average two- and five-year fixed rates of 2.51 per cent and 2.95 per cent are currently 1.28 per cent and 0.97 per cent lower than the equivalent rates on offer this time last year,” she said.
Enticing new business
Williams said following the end of the stamp duty holiday which had kept the property market buoyant for much of 2021, providers are now focusing on enticing first-time buyer business, which has often been considered the life blood of the housing market.
“Indeed, those looking to secure a 95 per cent LTV mortgage may be very pleased to note that at 3.09 per cent and 3.39 per cent, the average fixed rates on offer have plummeted to the lowest on our records (which go back to 2011).
Williams continued that due to rising house prices, mortgage affordability concerns and until recently, limited product choice and higher rates, taking that first step onto the property ladder may have felt a distant possibility for many.
“These positive figures may provide some hope to those who dream of owning their own home.”