Mortgage availability up 53% in Covid recovery

Mortgage availability up 53% in Covid recovery
Credit: Jason Alden/Bloomberg

An improvement in mortgage choice suggests lenders are confident that demand will remain prevalent in the coming months, according to Moneyfacts.

Figures from the data provider show the number of residential mortgages available at the start of May has risen for a seventh consecutive month to 3,927, up 53 per cent year-on-year and the highest total since March last year (5,222 products).

The highest year-on-year recovery was in the 90 per cent bracket, with 481 deals available at the beginning of the month, almost five times as many as the 100 products on offer at the start of May last year.

The number of 95 per cent LTV products has almost tripled year-on-year, from 41 deals in May 2020 to 112 at the start of this month.

On a monthly basis, the only LTV tier where availability fell was at 80 per cent, potentially due to lenders shifting their focus and increasing the number of products in the higher LTV tiers, the data provider said.

Eleanor Williams, finance expert at Moneyfacts, said the return of higher LTV products was well-timed as house prices continue to rise. Halifax’s house price index for April showed house prices were 8.2 per cent higher year-on-year, marking the highest annual growth rate in five years.

However, the average five-year fixed rate for all LTVs rose by 0.02 percentage points to 2.79 per cent at the start of May, which the data provider said was likely due to the rise in the number of higher LTV products available.

Indeed, some mortgage brokers have expressed caution over rates as lenders continue to launch five-year fixed rate deals at 95 per cent LTV.

Meanwhile, the average two-year fixed rate for all LTVs fell by 0.01 percentage points to 2.57 per cent at the beginning of May, after nine months of increases.

The average ‘shelf life’ of a mortgage deal also increased to 32 days, potentially indicating greater stability in the residential market, according to Moneyfacts.

Product count: all LTVs2,5663,8423,927
Average two-year fixed rate: all LTVs2.09%2.58%2.57%
Average five-year fixed rate: all LTVs2.35%2.77%2.79%
Shelf life (days)342932
Data shown is as at the first available day of the month. Source: Moneyfacts Treasury Reports

Vikki Jefferies, proposition director at Primis Mortgage Network, commented: “There is clearly great momentum from lenders to return to the high LTV space – not forgetting those who have signed up to the government’s 95 per cent mortgage guarantee scheme – which is good news for first-time buyers and younger borrowers who are looking for low deposit mortgages.”

Jefferies added: “Over the coming months, lender appetite and buyer demand will continue to grow as the UK’s vaccine roll-out and economic recovery progresses.”

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