At 1 August, there were 2,526 mortgage products on the market, a drop of 2,696 since 1 March and a 202 product decline month-on-month.

And as banks’ mortgage ranges shrink, interest rates have begun to creep up.

Both the two- and five-year fixed average rates for all loan to values (LTV) have increased by 0.09% since the beginning of July, now 2.08% and 2.34% respectively.

Rates in the higher LTV tiers have increased more than those in the lower brackets.

The sharpest climbs can be seen at 85% LTV, with the average two-year fixed rate increasing by 0.21% this month, and the five-year equivalent climbing by 0.23%, now at 2.32% and 2.57% respectively.

Rates remain low

But compared to August 2019, rates are still low. The overall two-year fixed rate for all LTVs is 2.08%, 0.41% lower than it was in August of 2019.

Five-year fixed deals, now priced at 2.34% on average, are 0.50% lower this month than a year earlier.

Eleanor Williams, finance expert at Moneyfacts, said: “Until there is more certainty regarding the economic outlook and clarity around risk, which may well not become clear for some months particularly until the government furlough scheme winds down at the end of October, it seems unlikely that the mortgage sector will bounce back to the levels of availability that we saw six months ago.”

She added: “Those who have been waiting to see how the market moves may want to consider pursuing a new deal now and lock into a low rate before they potentially climb further.”

Last week, the Bank of England voted unanimously to keep the base rate at 0.1% and noted that banks had begun increasing rates on higher loan to value deals, where there is less competition, to rebuild squeezed margins.