Low deposit mortgages are on the rise
The availability of low deposit mortgage deals has surged to its highest level in over two years, offering a glimmer of hope for prospective homebuyers. And in our eyes, this could signal that market stability is increasing. According to the latest data from Moneyfacts, the number of 95% loan-to-value (LTV) mortgage offers rose to 361 in June 2024, marking the highest count since May 2022, when 369 deals were available. In this article we will discuss what a low deposit mortgage could look like for you, and what the new changes we are seeing could mean for future borrowers.
Low Deposit Mortgages Are Increasing
The June Mortgage Trends Treasury Report by Moneyfacts highlights a notable increase in the overall product choice across the mortgage market, with 6,658 deals available. This figure is the highest since February 2008, when lenders offered 6,760 deals, indicating a broadening range of options for borrowers. Additionally, the average shelf-life of a mortgage product has doubled from 15 days to 30 days over the past month. In our opinion, the increase in both products and the length of time that products are available for signals a return to some form of market stability, a welcome change from the record-low average shelf-life of 13 days recorded in July 2023.
Mortgage Rate Increase
Despite these positive developments, the report notes modest increases in average mortgage rates for both two- and five-year fixed-rate deals, which rose by 0.02% and 0.03%, respectively. This marks the fifth consecutive month of rate rises, with the average two-year fixed rate at 5.95% and the five-year fixed rate at 5.53% as of the start of July. The average two-year fixed rate remains 0.42% higher than its five-year counterpart. The average two-year tracker variable mortgage rate held steady at 5.94%, while the average standard variable rate, slightly decreased to 8.17%, just below the record high of 8.19% recorded in late 2023.
Expert Opinions
Rachel Springall, a finance expert at Moneyfacts, commented on the current state of the market: “There is lots of room for growth in this area of the market [low-deposit mortgages], as it currently represents just 5% of all deals available to borrowers across fixed and variable mortgages. Overall, product availability continued to rise, spreading a positive sentiment on mortgage choice for another consecutive month, its highest point in 16 years.”
Springall also acknowledged the concerns borrowers may have regarding rising mortgage rates: “The overall average two- and five-year fixed mortgage rates rose for a fifth consecutive month may come as disappointing news to borrowers. However, one positive aspect to take away from activity during June is that the rises were modest. One notable difference month-on-month has been a return to the stability in the shelf life of a mortgage deal, which has doubled to 30 days, up from 15 days.”
Speak To A Mortgage Advisor About Low Deposit Mortgages
For those looking for a low deposit mortgage, seeking advice and guidance from a qualified mortgage advisor is crucial. At Oportfolio Mortgages, we are dedicated to helping you find the right path forward. We can assist in determining the optimal deposit for your circumstances and securing the best mortgage product available. With expert advice tailored to your needs, you can confidently navigate the mortgage market and make informed decisions about your financial future.
Of course if you are looking to put down a minimal deposit, you need to meet the mortgage affordability. For example, if you are looking at a purchase price of £500,000 and you want a 95% mortgage, you must be able to afford the £475,000 mortgage based on the mortgage lenders affordability checks. For more information on mortgage affordability and deposits, please feel free to give our team a call today.
