Moneyfacts: Low-deposit mortgages

Even in times of doom and gloom, there are usually small shards of light that can be found if the search is thorough enough.

With the UK economy currently treading a precarious tightrope, we could be forgiven for thinking that struggling to afford things isn't going to improve any time soon.

And that includes the process of saving to buy a property, especially if you're a first-time buyer scraping together the necessary funds to pay a deposit on a mortgage.

It's clear that the housing market generally bucks against what is happening elsewhere in the economy - or at least it isn't so badly impacted by the economic forces as other parts, and quickly bounces back. All of which means finding the money to take out a mortgage on the shifting sands of rising prices still seems to be an impossible task.

However, despite this somewhat gloomy picture, there is interesting news that might help. According to retail financial product data provider Moneyfacts, the ability to find a low-deposit mortgage is at its greatest point now than at any time since 2020.

This should be of particular interest to first-time buyers, who are the group that have the most difficulty in stepping up the property ladder because, while they are trying to save for a potentially large deposit, their available funds are being whittled away by the expenses of living in a rental accommodation - always assuming that they are not living at home still or living off the help from the famed Bank of Mum and Dad.

In the Moneyfacts UK Mortgage Trends Treasury Report (issued February 2025), the data reported shows:

• Availability of deals at the 95% level are the highest in five years (2020)
• However, overall, the product choice available has fallen month-on-month
• But numbers of available products are significantly higher than a year ago
• Mortgage rate status:
• At the start of February 2024, the average five-year fixed rate was 5.18%; compared to the start of this month, the rate is 0.14% higher at 5.32%. However, the average two-year fixed rate has fallen by 0.04% over the same period, down from 5.56% to 5.52%.
• The average two-year fixed rate is 0.20% higher than the five-year equivalent but the gap is at its lowest margin since January 2023 (0.16%). The two-year fixed rate has now been higher than the five-year equivalent since October 2022.
• The average two-year tracker variable mortgage rate fell to 5.46%.

Rachel Springall, who is the Finance Expert at Moneyfacts, commented on the findings:

“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. 

“There are now 388 options available, the highest level since March 2020, when there were 391 deals. 

“This is positive to see, but there is still lots of room for more deals to be pushed out in this area of the market as it represents just 6% of all deals available to borrowers across fixed and variable mortgages. 

“Despite rising choice, average rates across a two- or five-year fixed deal at 95% loan-to-value are higher than at the start of 2025. 

“Overall product availability across the mortgage spectrum fell, but the average shelf-life of a deal rose month-on-month, which was largely expected due to the festive period when there are typically fewer changes from lenders.”

For the first-time buyer and those trying to move home, this shows that the products are available, and the terms of borrowing are better than they have been for a few years.

You might want to consult a mortgage broker to help you wade through everything that is available to find the best product and terms to fit your needs.

And, despite the fact that the first-time buyer reduction in stamp duty is coming to an end at the beginning of April, now looks like a good time to think about your opportunities for moving.

If you are looking to buy your first house, or are simply wanting to buy your next property and sell your current one, you'll want to ensure that your conveyancing solicitor gives you a high quality of service that is value for money.

To this end, look no further than Homeward Legal. 

Our conveyancers will start work on your plans as soon as you agree to the quotation and appoint them to represent you. 

Homeward Legal will also provide a quote that will not change - what you are quoted is what you pay for standard conveyancing process, which means you can effectively budget for your conveyancing needs.

There are some unforeseen items that might arise during the purchase and/or sale, which includes a specialist flood assessment report, but the solicitor discusses these and their cost as they come up. 

In addition, to protect the homebuyer further, Homeward Legal operates a ‘no completion, no fee' promise, which ensures that, should the purchase or sale not go through as planned to completion status, no payment is required.

Call  to get your conveyancing quote started, or to discuss your concerns with your plans to move.

Or you can get a quick quote, using Homeward Legal's easy-to-use quote generator.