"Those who have a 10% deposit or equity will be pleased to see that average rates for two and five-year fixed deals have reduced by a notable 0.17% and 0.26%"
Mortgage rates have fallen to new record lows across a range of LTVs during the Covid-19 pandemic, according to new figures from Moneyfacts.
The number of available products has more than halved when compared to the beginning of March, reducing from 5,222 deals available to just 2,566 at the start of May.
Alongside this drop in choice, average rates have fallen to new record lows since Moneyfacts began recording the data in June 2007.
The average overall two-year fixed rate now sits at just 2.09%, a fall of 0.34% between March and May.
The average rate for five-year fix across all LTVs has surpassed last month’s low of 2.66% to reach a new low of 2.35% - a fall of 0.39% since March.
Within this, two-year fixed rates have fallen by 32bps to 1.97% at 75% LTV and by 17bps to 2.40% at 90% LTV. Five-year fixed rates have seen a similar fall of 36bps and 26bps respectively.
Only 95% LTV mortgage rates have increased, with two-year fixes rising by 10bps to 3.36% and five-year fixes by 4bps to 3.62%.
Eleanor Williams, finance expert at Moneyfacts, said: “Since the beginning of March, we have so far seen a fall of 2,656 residential mortgage products in the market, approaching the levels of products on offer in June 2011 when 2,534 products were available.
“What is also evident from our data is that product choice for borrowers requiring higher LTV deals has plummeted for both two and five-year fixed rates. Looking at products often favoured by first-time buyers; at 90% LTV, the number of products available has dropped by 270 and 243 for two and five-year fixed rate options respectively. At 95% LTV, the product count has dropped by 126 and 131 respectively, leaving only 22 two and five-year fixed rate deals available in total to new borrowers.
“Considering the same two sectors of the market in relation to average interest rates, those who have a 10% deposit or equity will be pleased to see that average rates for two and five-year fixed deals have reduced by a notable 0.17% and 0.26% respectively. However, for those looking for a 95% LTV product, average rates bucked the trend and have in fact increased by 0.10% for two-year fixed rates and 0.04% for five-year deals. The fact that average rates in the highest LTV bracket have increased is probably due to the small number of products remaining in the market leaving a significantly reduced sample size, and also the fact that these products are priced according to the higher risk to lenders when borrowing with only a 5% deposit or equity.
“We are now beginning to see lenders relaunching products within their ranges, and some providers have eased the LTV caps they put in place early in the crisis. Mortgage lenders are still open for business and, for those eligible, rates are low."