The number of 95 per cent LTV mortgage products on the market has fallen significantly in the last month, according to Moneyfacts.

Analysis by the company shows that the number of these high-LTV products with a two-year fix fell from 11 to six from May to June, and under a five-year fix, from 11 to nine products.

At the same time, the choice of 90 per cent LTV two-year fixes jumped from 24 to 55 and for five-year fixes at the same LTV, from 26 to 51.

Average rates fell across the board within the same time frame. The average rate for a 95 per cent two-year fix fell from 3.36 per cent to 3.28 per cent and for a five-year fix, from 3.62 per cent to 3.48 per cent.

Rates are much lower with a doubling of the deposit: at 90 per cent LTV, the average rate for a two-year fix fell from 2.40 per cent to 2.30 per cent and for a five-year fix, rates dropped from 2.65 per cent to 2.57 per cent.

“As lockdown eases, individuals return to work and attempt to discover normality again they may well be starting to house hunt,” says Moneyfacts finance expert Rachel Springall.

“However, it may be a bit premature for them to buy a home imminently and instead they may wish to wait for more competition to return to the mortgage market for low deposit deals. Alternatively, if borrowers have a bit of extra disposable income and the ability, they would be wise to raise their deposit to 10 per cent to find a greater choice of deals for a lower cost.

“It is hoped that the mortgage market will adapt once more to accommodate borrowers with small deposits, but it will not happen overnight,” she says.

Legal & General Mortgage Club head of lender relationships Danny Belton sees no reversal of this trend any time soon. He says: “There is a desire from lenders to move back to even higher LTVs, but 90 per cent is likely to remain the new normal for the time being.

“In part, this is due to ongoing uncertainty around the impact of Covid-19, but more so the fact that lenders are still rightly focused on supporting existing customers and managing their operational capacity. Just like other businesses, lenders have had to adapt their workforces to work largely from home, while they continue to manage thousands of enquiries about payment holidays – as  many as one in seven have now opted to defer their mortgage repayments.”