"With many uncertainties in the market, providers might be treading carefully and more cautious about what they choose to offer the higher risk borrower"
Moneyfacts figures show that the number of 95% LTV deals stood at 225 this month - higher than the 195 seen in August 2015 but below the high of 270 seen in March.
Moneyfacts says the news is "particuarly bruising" for first-time buyers, who predicted that a fall in house prices following the EU referendum vote would help them onto the housing ladder.
However 95% LTV rates remain at all time lows, with the average two-year fixed rate at 95% LTV down from 4.44% in March to 4.04% today.
Charlotte Nelson, Finance Expert at Moneyfacts, said: “Unfortunately, a downturn in property prices can have a significant impact on the higher LTV mortgage sector. A negative turn in prices effectively depreciates the provider’s resale value of the bricks and mortar, which results in providers reeling in their criteria and paring back their offerings to this section of the market.
“With many uncertainties in the market, providers might be treading carefully and more cautious about what they choose to offer the higher risk borrower, such as high cash incentives and multiple product options.
“It is still unknown what effect the Help to Buy Mortgage Guarantee scheme ending this year will have, but the number of products at 95% LTV is likely to dwindle yet again, providing a further blow to borrowers with small deposits who were getting accustomed to the plethora of choice they had.
“Whilst it may feel that the odds are stacked against the first-time buyer, the 95% LTV market has seen a marked improvement from even a few years ago."
