Rising number of mortgage deals for homebuyers and property investors


The number of mortgage deals, especially those with smaller deposits, are increasing. Homebuyers and property investors are welcoming this additional choice.

There has been a rise in the number of mortgage deals available month-on-month, providing additional choice for those seeking mortgages. As there is strong buyer demand, this will likely be particularly welcome news, especially for buyers with smaller deposits.

Between March and April, the total number of mortgage deals available increased by 85, from 3,842 to 3,927. This is according to data from the Moneyfacts UK Mortgage Trends Treasury Report. The number of deals increased month-on-month on all deposit amounts, except 80% loan-to-value (LTV) mortgages.

This increase in mortgage availability shows lenders are gaining more confidence. With the UK economy bouncing back quicker than expected from the COVID-19 pandemic, lockdown restrictions being lifted and the success of the vaccine rollout, lenders will likely continue to gain more confidence in the coming months.

More smaller deposit mortgages available

Deals with smaller deposits have seen the biggest increase. The number of deals available to buyers with 5% deposits saw the most significant increase. The number of 95% LTV mortgages increased by 78 month-on-month. There were only 34 deals in April, and this rose to 112 in May.

The number of these products in particular has been substantially low since the beginning of COVID-19. Some of the increase in 95% LTV mortgages is due to lenders returning to the sector. And some of the products are through the government’s mortgage guarantee scheme.

Additionally, mortgage deals with 10% deposits also saw an increase. In April, there were 4040 deals. This grew by 41 deals to 481 in May.

Mortgage deals for buy-to-let investors

Previous research from Moneyfacsts also showed mortgage options have increased for first-time buy-to-let landlords as well. In the past year, there has been a rise in small and first-time landlords are entering the sector. Lenders are gaining more confidence and becoming more willing to lend to first-time landlords.

Additionally, interest from landlords for green mortgages has increased sixfold. As interest grows, more lenders are launching green mortgage offerings. In the coming years, green mortgages will likely become a larger part of the finance sector.

What is happening to interest rates?

After a strong economic bounce back, the Bank of England has held the base interest rate at 0.1%. In March 2020, the central bank first set the base rate at this record low, and it has stayed at that level ever since.

Between April and May, the average two-year fixed rate on mortgage deals decreased slightly. This fell from 2.58% to 2.57%. On the other hand, the average five-year fixed rate increased. This went up from 2.77% to 2.79%.

Eleanor Willliams of Moneyfacts explains this increase “may tie into the resurgence of higher LTV products, which traditionally carry higher rates”.

Both two-year and five-year fixed rate averages are up year-on-year. However, overall interest rates are still relatively low. During the last month, there were interest rate reductions across many different kinds of products.

Competitive deals on offer

Currently, there are a range of competitive deals on the market. Moneyfacts also recommends not just looking at the interest rate being offered when deciding on a mortgage deal. Other aspects of the deal should be considered as well. This includes the incentives and product fee being offered because these can impact the overall cost of the mortgage product.

Eleanor Willliams concludes: “There has been a reduction to the average fee charged (excluding no-fee deals) compared to last month and a three-day increase on the average shelf-life of a mortgage overall, which means that borrowers have around a month to secure their chosen product.

“As always borrowers would be wise to seek advice if they are looking for a mortgage, not only to navigate the boom in choice, but also to ensure they get guidance on eligibility criteria and support to secure the best option for their circumstances.”

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Rising number of mortgage deals for homebuyers and property investors


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