"It is hoped that the mortgage market will adapt once more to accommodate borrowers with small deposits, but it will not happen overnight."
There are just six two-year fixed rate products and nine five-year fixed rate deals currently available, down from a combined total of 22 in May and 105 in April.
Meanwhile, the number of two-year fixed rates at 90% LTV have risen by 31 and five-year deals by 25 between May and June.
Rachel Springall, finance expert at Moneyfacts, said: “While it is encouraging to see some higher loan-to-value deals return to the market at 85% and 90% loan-to-value, it has so far been slow and steady progress. At the same time, borrowers who have only mustered a 5% deposit to get onto the property ladder will find very few fixed rate mortgage deals on the market available to them.
“Borrowers may need to wait a little longer for providers to accommodate them if they only have 5% deposit to buy their first home, as there has been no improvement to growth in choice of deals available to them over the past month, it has in fact shrunk. Today there are just six deals for borrowers looking for a two-year or nine deals on a five-year fixed rate mortgage at 95% loan-to-value, down from 22 in both areas combined a month ago and 105 in April.
“As lockdown eases, individuals return to work and attempt to discover normality again – they may well be starting to house-hunt. 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% 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.”
