The average two-year fixed rates at both 95% and 90% loan-to-value (LTV) have fallen to their lowest levels since September 2022, new data from the Moneyfacts UK Mortgage Trends Treasury Report has revealed.

The drop in pricing coincides with a surge in the number of products available at 95% LTV, which has now reached its highest level in 17 years, last seen in March 2008.

Lenders have been steadily reducing the cost of low-deposit mortgages, driving the average two-year fixed deal at 95% LTV down to 5.41%. This marks the lowest point since September 2022, when the average stood at 4.51%. Similarly, the average two-year fixed rate at 90% LTV has fallen to 5.24%, also its lowest level since September 2022, when it was 4.27%.

Across the broader market, the average two- and five-year fixed rates dipped slightly, down by 0.04% and 0.01% respectively, to 4.94% and 5.01%. This follows a small uptick in rates the previous month — the first increase since February 2025.

Shorter-term fixed mortgages have seen the sharpest reductions over the past year. In November 2024, the average five-year fixed rate stood at 5.09%, compared with 5.01% at the start of this month. Meanwhile, the average two-year fixed rate has fallen more steeply, dropping by 0.45% over the same period, from 5.39% to 4.94%.

The overall Moneyfacts Average Mortgage Rate now sits at 4.99%, down from 5.02% a month earlier, 5.31% in November 2024, and well below the 6.07% recorded in November 2023.

Despite the easing in rates, lender activity has created some volatility in product availability. The average shelf-life of a mortgage deal has shortened slightly to 21 days, down from 22 days the previous month. The average two-year tracker variable rate also dipped, falling to 4.66%, while the average ‘revert to’ or Standard Variable Rate (SVR) remained unchanged at 7.27% — still considerably below its peak of 8.19% in late 2023.

Overall product numbers declined slightly month-on-month, with 6,918 options now available across the market. However, the number of 95% LTV deals increased to 465, the highest level since March 2008, when there were 575 options available.

Rachel Springall, finance commentator at Moneyfacts, said: “Borrowers with a limited deposit of just 5% or 10% will be thrilled to see the cost of a two-year fixed mortgage dip to a three-year low, before the ‘mini-Budget’ in September 2022.

“The number of deals available to borrowers at 95% loan-to-value has also improved, with the pool of deals at its highest count since 2008. The Government has been very vocal that it expects lenders to do more to boost UK growth, so the rise in choice and drop in cost is a healthy step in the right direction.

“However, deals at 95% loan-to-value only represent 7% of the residential mortgage market, so there is more room for improvement. Despite these moves, there will be borrowers who feel stuck due to a lack of supply in affordable housing.

“It may be a relief for borrowers to see fixed mortgage rates moving downwards once more. The Moneyfacts Average Mortgage Rate dipped below 5% and the activity among lenders led to a drop in the average shelf-life of a deal to 21 days. These movements will be positive news to those refinancing. Indeed, in November 2023, the average two-year fixed mortgage rate was 6.29%, compared to 4.94% now. That is a difference of £203 per month in repayments on a £250,000 mortgage over 25 years.

There will also be millions of borrowers who secured a cheap five-year fixed rate back in 2020, who are due to refinance, so they do need to prepare themselves for higher mortgage repayments. Seeking advice to assess the latest deals and not to fall onto the revert rate is essential, particularly as the average SVR is 7.27%.

“It is worth noting that lenders are already working hard to price down their mortgages to entice new business as part of their end of year targets, supported by recent falls in swap rates. In addition, even existing borrowers can choose to lock into a new rate around six months before their current deal ends in most cases.

“The key date that is causing borrowers to adopt a ‘wait and see’ approach is without doubt the upcoming Budget. So far, the rumour mill has spun out a variety of ideas which could impact borrowers from different ends of the market. On one hand, the idea to abolish Stamp Duty Land Tax and an introduction of a new way of taxing could work in favour of first-time buyers, saving them thousands of pounds upfront, helping them get that crucial first step on the property ladder.

“However, like a double-edged sword, creating a new property tax that puts the burden on sellers could lead to homeowners refusing to move, hitting supply. Supply could worsen if CGT exemptions on primary residences is removed and if the yearly tax levy dubbed the ‘mansion tax’ becomes a reality. It is essential borrowers seek advice before they make any quick decisions and not feel rushed because of the Budget rumour mill.”