Continued growth in product choice for borrowers, in addition to rate competition, has led to reductions in overall average fixed rates month-on-month, according to the latest Moneyfacts UK Mortgage Trends Treasury Report data.
Nine months of consecutive increases in mortgage availability has seen total product choice reach its highest level in 16 months, with 4,512 deals on offer.
This is an increase of 269 in the last month alone, and the highest this has been since March 2020, when the figure was 5,222.
This is the first time since June of 2018 that Moneyfacts has recorded availability increasing across all the individual loan-to-value (LTV) tiers.
Borrowers seeking higher LTV products have seen the largest improvements in choice, particularly at 95%, where the research recorded a jump of 61 products compared to June 2021, while the current total of 253 available deals offers 239 products more than there were this time last year.
For only the second time in the past 12 months, both the average overall 2-year and 5-year fixed rates fell over the course of the month, to 2.55% and 2.78% respectively.
Reducing by 0.04% in both cases, these are the largest monthly reductions recorded for either rate since June 2020.
July 2020 logged record lows of 1.99% and 2.25% for these rates, due to the dearth of available deals fuelling these averages, particularly at the higher-rated, higher-risk top LTV brackets.
Eleanor Williams, finance expert at Moneyfacts, said: “The level of choice available to those looking for a residential mortgage has risen substantially again between June and July, as volumes rose by 269 new products bringing the total available to over 4,500.
“Over the past six months alone availability has recovered by 1,619 – or 56% – and for the first time in over three years, we tracked improvements in choice across all the LTV brackets this month, great news for borrowers with all levels of equity or deposit.
“Our data shows there is further cause for positivity as both the overall average 2 and 5-year fixed rates have fallen.
“At 2.55% the average 2-year fixed rate is at its lowest since February (2.53%), while the average 5-year rate at 2.78% is the lowest since April (2.77%).
“Although the 2-year overall rate is 0.06% above its equivalent rate from a pre-pandemic July 2019, the 5-year overall average rate is 0.07% below its equivalent two years on (2.85%) and could indicate lenders are moving to price longer-term fixed rates more competitively, perhaps reflecting a shift in borrower focus to locking in for stability in these uncertain times.
“First-time buyers and those considering a mortgage at higher LTVs are amongst those to benefit the most from rate cuts, with the average 2 and 5-year fixed rates at 90% LTV falling by 0.15% and 0.08% respectively, while at 95% LTV reducing by 0.09% and 0.06%, respectively, but equally it is impossible to ignore the growing ranks of providers offering sub-1% deals to tempt borrowers with larger levels of equity or deposit as well.
“According to the latest Halifax House Price Index, there was a 0.5% drop in property prices, likely linked to the stamp duty holiday tapering off, but this in no way detracts from the fact that overall prices are up approximately 8.8% on a yearly basis.
“Demand for the very limited supply of property could remain high, as the appetite to either get onto the property ladder or for larger properties with home offices and outdoor space continues, and these borrowers could be enticed by the possible savings lower mortgage rates may bring them.
“Competition is evident across the residential mortgage sector, but there is no guarantee that rates will continue to fall, or for how long these record-low deals may be available for, therefore seeking advice to assess the best true cost deal for their own circumstances would be a wise move by any prospective borrower.”