According to financial information service Moneyfacts, there were 1,360 mortgage products requiring a deposit of just 5% or 10% in September. This is the highest total since March 2008 and means low-deposit deals now account for almost a fifth of the UK homeowner mortgage market.

For buyers with a 5% deposit, the number of available mortgages has nearly doubled in two years to 464. Those with a 10% deposit can choose from 896 products, a significant increase from 632 a year ago.

This growth in product choice follows reforms from the Financial Conduct Authority (FCA) earlier this year, which were designed to create more flexibility in the market and have led to changes in lenders’ affordability assessments.

However, despite the increased availability, significant challenges remain. Borrowing costs are still more than three times higher than they were in the period following the pandemic. Mortgages with a higher loan-to-value (LTV) ratio also attract higher interest rates, resulting in more expensive monthly repayments.

Rachel Springall, a finance expert at Moneyfacts, cautioned that while the trend was positive, “affordability remains a critical hurdle for buyers”. She noted that interest rates on these high-LTV products have fallen by only “miniscule margins” in the last month. The average five-year fixed rate for a 95% LTV mortgage, for instance, fell by just 0.02%.

Across the wider market, overall product choice has expanded to its highest point since October 2007. However, borrowers must act quickly, as the average “shelf life” of a mortgage deal has fallen to just 17 days, down from 21 days this time last year.