The stage is set for a fruitful year for aspiring first-time buyers, amid increased choice for borrowers with small deposits and relaxed stress tests, according to the latest data from Moneyfacts.
The Moneyfacts UK Mortgage Trends Treasury Report shows that first-time buyers and those with little equity to refinance will have a greater choice of mortgage options.
January saw a rise in the number of higher loan-to-value (LTV) deals, with 90% LTV options at a record high, plus an increase of 95% LTV deals, which are at their highest since March 2008.
Meanwhile, total product choice increased month-on-month to 7,537 options, meaning there are now more than 1,000 additional offers available year-on-year.
The mortgage activity resulted in an increase in the average life of a mortgage to 33 days, which Moneyfacts says is a typical pattern for the seasonal slowdown at the start of a new year.
Data also shows that fixed mortgage rates rose for the first time since October 2025.
The average two- and five-year fixed mortgage rate rose by 0.02% and 0.03% month-on-month, respectively, to 4.85% and 4.94%.
Moneyfacts’ average mortgage rate rose from 4.87% to 4.90% month-on-month, while the annual rate fell by 0.55%, compared to 5.45% in February 2025.
Moneyfacts highlights that cuts to the Bank of England’s base rate have contributed to the decline in the average two-year variable mortgage rate, now down from 4.44% to 4.41% month-on-month, which is down 1.05% year-on-year from 5.46%.
Customers refinancing a mortgage will find that the incentive to switch has increased as fixed rates are significantly lower than the average ‘revert to’ rate or standard variable rate (SVR).
The average SVR fell from 7.78% to 7.15% month-on-month, now down 0.63% year-on-year, but those who take out permanent contracts from 2021 could see their repayments rise.
The highest recorded figure was 8.19% in November and December 2023.
Moneyfacts financial expert Rachel Springall says: “This year promises to be a fruitful one for first-time homebuyers, and really, they need all the help they can get amid the lack of affordable housing.”
“Despite mortgage rate volatility in recent weeks and a typical seasonal slowdown in activity that resulted in an increase in the average deal life to 33 days, the latest boost to product choice and sentiment towards easing stress tests will be encouraging news for borrowers.”
Commenting on the number of options available, Springall notes: “The increase in choice included specialist lender West One joining our systems in January, as well as Penrith Building Society launching higher LTV options. While this is a useful boost, there is much more room for improvement to improve choice and competition on the higher LTV spectrum.”
“Outside of options for borrowers, there have been some notable revisions to the loan-to-income ratio in recent months, which will further increase the chances for first-time buyers to secure a deal.”
“An example is Nationwide, which now lends up to six times income to customers refinancing their mortgage or moving, with an LTV of up to 95%. Lenders have been urged to do more to support first-time buyers to drive growth in Britain, so any improvement should be welcomed. However, it is essential to seek advice before entering into a deal.”
“Hopefully there will be continued improvement in mortgage lending as a Financial Conduct Authority lending ‘Roadmap’ review will be a focus this year.”
“Not every borrower will be as optimistic about falling mortgage costs this year, as there will be divisions among those who refinance depending on when they lock in their original rate.”
Meanwhile, Mary-Lou Press, president of NAEA Propertymark, added: “The increase in higher mortgage products is a welcome and much-needed boost for first-time buyers, many of whom continue to face significant affordability pressures.”
“Greater choice at 90% and 95% LTV, alongside signs of more flexible lending criteria, should help more people take their first step onto the property ladder.”
“However, better access to finance must be accompanied by measures to increase the supply of truly affordable housing. Without addressing the chronic housing shortage, especially in areas of high demand, many would-be buyers will still struggle despite these positive developments in the mortgage market.”