The number of mortgage deals available has broken through the 5,000 barrier for the first time in more than a year.

Key takeaways

A total of 5,146 mortgage products are now available, the highest level since February 2022, according to financial information group Moneyfacts.

The increase in choice is across all deposit levels, with nearly 140 new products launched for people with only a 10% deposit, taking the total number to 684 and putting it on a par with availability for those with a 40% deposit.

Meanwhile, the number of different mortgages available for people with a 15% deposit has reached its highest level since Moneyfacts records began.

What’s happening with mortgage rates?

Mortgage rates rose sharply and lenders withdrew large numbers of products in the wake of former Chancellor Kwasi Kwarteng’s mini-budget in September last year.

But rates have been on a steadily downward path since October, as lenders repriced their deals following falls in the rate at which they borrow money for fixed rate mortgages.

The average interest rate charged on a five-year fixed rate mortgage dropped by 0.23%, despite the Bank Rate increasing by 2% during the same period.

However, inflation remains stubbornly high, meaning interest rates are unlikely to drop much further for the rest of this year.

Average rates for different loan-to-value mortgages

Product choice for first-time buyers has increased, not just for those with a 10% deposit, but also for those with a 5% one, with the number of deals in this space rising to 204 now, up from 161 in March and just 34 two years ago.

The average interest rate charged on five-year fixed rate mortgages for people with a 5% deposit has also fallen slightly, dropping by 0.06% to 5.27%.

However, mortgage costs for buyers with a 10% deposit have seen slight increases, with two-year deals rising by 0.14% and five-year ones by 0.27% to stand at 5.64% and 5.26% respectively.

For people borrowing 60% or less of their home’s value, the cost of deals has bucked the trend in the wider mortgage market. 

Two-year fixed rate products have dropped by 0.06% to average 4.95%, while five-year ones have fallen by 0.11% to 4.65%, as lenders continue to compete for business in this sector.

What should I do if I need to remortgage?

The average interest rate charged on a standard variable rate mortgage – the rate you are automatically moved to when your existing deal ends if you do not remortgage – has risen to 7.3%, the highest level since February 2008.

The cost of a two-year tracker mortgage compared with a two-year fixed rate one has narrowed during the past month, with tracker deals now averaging 5.02%.

Unlike a fixed rate mortgage, the interest rate charged on a tracker mortgage moves up and down in line with changes to the Bank Rate. 

This means that if interest rates rise again, so will your monthly mortgage repayments, but if they fall, the amount you pay will go down.

Meanwhile, five-year fixed rate mortgages continue to be cheaper than two-year ones.

Mortgage rates crept up a little in April, with the average cost of a five-year deal edging ahead by 0.05% to 5.05%, while two-year fixed rate mortgages rose by 0.03% to 5.35%.

This suggests that mortgage lenders expect interest rates to remain high in the short term, but be lower again in three to five years’ time.

Best buy deals offering interest rates of below 4% are still available to homeowners with large deposits and we expect new fixed-rate mortgages to largely remain between 4% to 4.75% on average for most of 2023.