Availability for 95% LTV mortgages reaches near five-year high

While first-time buyers have more deals to choose from, rates continue to rise.

The number of mortgage deals catering for up to 95% loan-to-value (LTV) rose to 388 in the month to the start of February 2025, according to the latest Moneyfacts UK Mortgage Trends Treasury Report.

Although only representing 6% of all deals available on the market, the sector out-performed growth for 90% LTV deals which only increased from 759 to 760, and 60% LTV mortgages which instead fell to 780 in the same period.

Meanwhile, overall choice dropped by 57 deals to 6,451 in February 2025, though still significantly higher than a year ago at 5,787 mortgages.

“Borrowers with a limited deposit may find it encouraging to see a growth in choice for mortgages available at 95% loan-to-value, now at its highest count in almost five years,” commented Rachel Springall, Finance Expert at Moneyfactscompare.co.uk.

Indeed, this is the highest this figure has been since March 2020 when availability sat at 391.

Average rates on the rise

Despite increased choice, average rates for 95% LTV mortgages have risen since January 2025. Longer five-year rates saw the larger hike, rising month-on-month from 5.47% to 5.72%.

By comparison, the overall average five-year rate now sits 0.07 percentage points higher at 5.32% compared with January 2025, and 0.14 percentage points higher than rates in February 2024.

However, following last week’s decision to lower the UK’s central interest rate to 4.50%, many potential borrowers will now be eagerly watching for rates to fall, though the expectation for inflation to rise in the coming months could curb the chance for further cuts.

“In truth, it can take a few weeks for lenders to catch up to a change in course on future rate expectations, or indeed to pass on reductions from any Bank of England base rate cuts, as the latter would be more immediately beneficial to borrowers sitting on a linked tracker rate,” Springall noted.

Is now a good time for first-time buyers to get a mortgage?

Last month saw the Financial Conduct Authority (FCA) commit to simplifying lending and advice rules for mortgages, which many saw as a positive, particularly for those attempting to get on the property ladder, as it could see more affordable deals on the market in the future.

“Lenders have been urged to do more to support first-time buyers, to boost growth in the economy, thus the debate on the loosening of lending rules,” Springall explained.

“Therefore, there is an expectation for more products and innovation to emerge this year,” she added.

However, as it’s unclear when exactly these changes can be expected, first-time buyers with smaller deposits or lower income could also turn to specialist options on the market in order to secure a deal.

Nevertheless, no matter what your situation is it can be useful to seek out professional advice from a broker to help decide what mortgage is right for you.

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