Mortgage availability has reached its highest level for more than a year, boosted by a growing number of high loan-to-value deals, according to Moneyfacts.
However, the average product fee rose to £1,053 this month, the highest figure recorded since November 2012 when it hit £1,107.
The number of products in the market increased by 9 per cent month on month from 3,522 in March to 3,842 this month.
It means that product availability has now recovered to 74 per cent of pre-pandemic levels, when there were more than 5,200 products to choose from.
The most significant increase was at 90 per cent LTV, where product numbers increased by 117 from 323 in March to 440 in April.
Following news of the government’s plan to launch a mortgage guarantee scheme, there was increased confidence among lenders to offer 95 per cent LTV deals, with product numbers increasing from just 5 in March to 34 today.
Average two-year fixed rates increased by 1 basis point to 2.58 per cent and average five-year fixed rates rose by 2 basis points to 2.77 per cent.
However, this appears to be largely due to the number of new 95 per cent LTV deals coming onto the market, pushing up the average.
Moneyfacts finance expert Eleanor Williams says: “Mortgage availability has improved for the sixth consecutive month, and for a third month the increase has been more than 300 products.
“Growth in product choice recorded across the LTV tiers is great news for prospective borrowers with all levels of equity or deposit, and indicates that lenders have continued confidence in the resilience of the sector as a whole.
“A further indication of confidence is the return of standard 95 per cent mortgage products to the market.
“Pre-empting the launch of the government’s mortgage guarantee scheme on April 19, a number of providers have already returned these deals to their ranges, with more set to join the ranks in the coming weeks.
“The recent Halifax buying vs renting review revealed that first-time buyers are now £800 per month better off than those renting, so a growth in product choice may bring joy to many beleaguered first-time buyers who had not been able to stretch their deposit beyond 5 per cent.
“Borrowers may wish to note that the average two-year fixed rate at 95 per cent LTV is currently 4.47 per cent, a full 1 percentage point above the corresponding rate this time last year, while the average five-year equivalent at 4.32 per cent is 0.42 percentage points higher year-on-year.
“Due to this, some may elect to wait until more providers and products are available to them.
“Interestingly though, the average five-year fixed rate at 95 per cent LTV is currently 0.15 percentage points lower than its shorter two-year equivalent – so for those without plans to move or remortgage, a longer-term fixed rate could potentially have lower monthly repayments, but careful consideration and seeking advice would be recommended, as this may not be suitable for everyone.”
On the increase to product fees, Williams adds: “This could imply that while lenders are working to attract borrowers with lower rates, they are looking to gain margins in other ways.”
