Choice of low-deposit mortgage deals hits eight-year high

Posted 2 March 2016 by Nick Parkhouse

New data shows homebuyers and remortgagers have the highest number of mortgages to choose from since the global financial crisis...

Over recent months, the launch of schemes such as Help to Buy has helped to boost competition between lenders at the low deposit end of the mortgage market. Now, research has found that the number of mortgage deals for borrowers with a small deposit has reached its highest level since the global financial crisis.

The news comes as data from a leading mortgage company has revealed that the number of new products available in the market as a whole has also hit its highest level since 2008.

Average two-year fixed rate for borrowers with a 10% deposit falls to record low

New research from the financial analysts Moneyfacts has revealed that there are now 845 mortgage deals available to borrowers with a 10% deposit or less; the highest number since April 2008 when 1,119 products were available.

Moneyfacts also found that the average rates on offer have also fallen to record levels. The average two-year fixed-rate mortgage rate for buyers with a 10% deposit has fallen below 3% for the first time.

Charlotte Nelson, a finance expert at Moneyfacts, said: “Competition in the overall mortgage market has seen rates plummet to record lows, including in the 90% and 95% LTV (loan-to-value) sectors. This is a fantastic development for first-time buyers."

Borrowers had choice of over 17,000 mortgage deals in January

While the choice of mortgage deals for borrowers with a small deposit has hit an eight year high, the choice of products generally available in the market has also reached its highest level since 2008.

Figures from a leading mortgage broker show that there were 17,132 products on the market in January, more than a third more than the 12,771 products available in January last year and the highest number seen since March 2008.

The advisory firm said the growing range of products together with stricter lending rules is having the effect of driving borrowers to use an independent broker rather than approaching a lender directly.

The number of mortgage products distributed through brokers increased by 42% year-on-year to 12,180 compared with a 17% rise in direct-only products. Broker products now accounts for 71% of the total product range available.

“The new affordability criteria and stress tests introduced as a result of MMR make applying for a mortgage a more time-consuming process,” says Brian Murphy, head of lending at the Mortgage Advice Bureau. It no longer makes sense to spend this time talking to just one provider when you could be researching the whole market with an independent broker. Lenders that have historically opted not to distribute through brokers have now changed their stance to reflect this.”


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