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Good news for those with small deposits, as competition hots up

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There's been a rise in mortgage lenders offering deals up to 95% of the property's value, and rates are falling
Good news for those with small deposits, as competition hots up

The number of mortgage providers that include a maximum 95% loan-to-value (LTV) product in their range now stands at 60, according to Moneyfacts, up from 53 a year ago and 13 more than five years ago.

The financial information provider said this increased competition in 95% LTV products has forced rates down. The average two-year fixed mortgage rate and average five-year fixed rate decreasing by 0.73% and 0.71% respectively over the same period.

The average two-year fixed rate is now 3.28% and the average five-year deal is 3.73%.

10-year shift

A decade ago, borrowers who could only raise a 5% deposit had just three products from three mortgage providers to choose from.

Today, a borrower has the choice between 405 products available from a total of 60 providers. Furthermore, no variable products at the 95% LTV tier were available at all, whereas 10 years on, borrowers have 67 variable products to consider.

Darren Cook, finance expert at, said: “As more firms become willing to lend at this higher risk tier, it means that potential borrowers have a greater choice of products, incentives and service from which to choose. This can only be good news to borrowers, especially for those with a preferred provider in mind or those who require a more specific product at this tier.

“It is also no surprise that more than four-fifths (83%) of mortgages available at maximum 95% LTV are fixed rate mortgages – accounting for 338 products of the 405 currently available – as these deals enable borrowers to have the certainty of knowing their monthly repayment amount, which is perhaps of particular importance to those taking their first steps on the property ladder.

“There clearly seems to be a positive drive by mortgage providers to try and secure the business of potential first-time buyers, who are the lifeblood of the mortgage market and it is encouraging to see rates decrease because of this healthy competition.”

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