It has gone as far to suggest buyers try to stretch their deposit to 10% in order to benefit from an even greater choice.

Its analysis found, despite a flood of new products entering this market and huge media attention, the best value deal at 95% LTV was the Barclays Springboard mortgage which has been one of the few 5% deposit products to remain on offer throughout the pandemic.

What’s more Moneyfacts said of the 112 deals now on offer at 95% LTV, 72 were not part of the mortgage guarantee scheme – meaning borrowers had a great deal of choice beyond government-backed deals to explore.

In fact, 78 more options appeared in the 95% LTV market since the start of April, both within and outside of the mortgage guarantee scheme. This compared to the five deals available at 95% LTV earlier this year.

In addition, availability at 90% LTV had also improved but remained a significant way off the 779 deals available pre-pandemic.

Drop in rates

As a consequence of the influx of new higher LTV deals Moneyfacts said the average fixed rates for the top lending tiers had fallen since the start of this month.

In the 95% LTV tier, the average two and five-year fixed rates reduced by 0.45% and 0.15% respectively. However they are 0.76% and 0.59% higher than in March 2020 – this was just prior to the mass withdrawal of 95% LTV deals.

Average two and five-year fixed rates at 90% LTV were 0.60% and 0.54% lower than those on offer to borrowers with just a 5% deposit available, said Moneyfacts

As such it has suggested borrowers could save thousands by stretching their deposit to 10% based on average rates today, saving up to £1,486 over two years and £3,379 over five years.

Eleanor Williams, finance expert at Moneyfacts.co.uk, said: “Approximately a week on since the biggest lenders launched products into the scheme, our analysis shows how this has impacted the sector and why borrowers may still be wise to look at deals outside of the scheme.

She added: “Despite the influx of deals under the new mortgage guarantee scheme and the media attention they have received, the lowest rate available in the 95% LTV sector remains the five-year fixed rate Springboard mortgage from Barclays Mortgage priced at 3.45%.

“As a guarantor mortgage, this deal requires family support for those with a limited deposit, so may be an option for some.”

Following this, the lowest true cost deal under the mortgage guarantee scheme was the two-year fixed rate Lloyds Bank 4.00% deal, Williams revealed.

When it came to the lowest true cost five-year deals, Williams said Coventry Building Society came out on top in terms of rates with a 3.89% deal which was not part of the government scheme.

“Affordability may remain a concern with borrowers regardless of the new scheme and generally consumers will find much more choice and lower rates if they can stretch their deposit to 10%,” she added.

“Borrowers could see a significant difference in monthly repayments by choosing a 90% LTV deal, saving as much as £1,486 over two years or £3,379 over five years on a 90% LTV deal compared to a 95% deal on average.”