Borrowers now have the greatest number of mortgages to choose from since the first national lockdown came into force last March.

Mortgage choice has reached its highest level for 11 months as lenders launch a raft of new deals.

There are currently 3,215 mortgages to choose from, such as fixed rate and tracker mortgages, with different terms, interest rates and incentives.

That’s the highest number since March 2020, when the first national lockdown came into force. There were 5,222 mortgages in the market at that point.

And since October, the number of mortgages available has increased by 42%, the biggest four-monthly rise in choice since 2007, according to financial information group Moneyfacts.

Why is this happening?

Mortgage choice fell sharply in the first half of 2020, as lenders withdrew their mortgages while they reassessed the level of risk that they were prepared to take in the face of the Covid-19 pandemic.

Borrowers with only small deposits were hit particularly hard, with nine out of 10 mortgages for people borrowing 90% of their home’s value withdrawn between March and the end of June.

But the fact that choice is improving again, particularly for people with small deposits, suggests lenders are now less risk averse, while stable interest rates point to increased competition in the market.

Who does it affect?

First-time buyers

There was good news for first-time buyers, with the number of mortgages available to people with just a 10% deposit rising to 248, 88 more than in January.

First-time buyers have not only seen an increase in product choice, with the number of deals available for those with a 10% deposit nearly quadrupling during the past four months, but interest rates on the mortgages have also fallen.

In a further sign that competition is returning to this sector of the market, the average cost of a two-year fixed rate loan for someone borrowing 90% of their home’s value fell by 0.09% during the past month, while the cost of a five-year fixed rate deal dropped by 0.07%.

Despite these improvements, choice remains very limited for people with only a 5% deposit, with just five deals currently available, down from eight in January.

Existing homeowners

There is also good news for home-movers and people looking to remortgage, as the number of different deals available to choose from has increased significantly, with nearly 500 different mortgages available for people borrowing 60% of their home’s value.

The cost of a mortgage has also fallen for people with large equity stakes of at least 40% in their home.

After being on a steady upward trajectory during much of the second half of last year, interest rates charged on a two-year fixed rate mortgage for these borrowers have dropped by 0.05%, while rates on five-year fixed rate deals have fallen by 0.07%.

What’s the background?

In a further sign that the mortgage market is stabilising after a turbulent year, the number of days for which individual mortgages are available before lenders withdraw them rose from 28 days in January to 40 days.

The move is good news for potential borrowers as it gives them a better chance to secure the deal they want before lenders replace it with a different offer.

Eleanor Williams, finance expert at Moneyfacts, said: “This, coupled with overall average rates remaining quite static and availability continuing to improve, could imply the mortgage market is now the most stable it has been since the onset of the pandemic last year.”

Top three takeaways

  • Mortgage choice has reached its highest level for 11 months as lenders launch a raft of new deals
  • There are 3,215 different mortgages to choose from, a 42% increase since October
  • The number of mortgages available to people with just a 10% deposit rose to 248, 88 more than in January