Moneyfacts – Fixed rates for 95% LTV mortgages reach new lows
Data from Moneyfacts show that the average fixed rate for mortgages at 95 per cent LTV are the lowest on record.
This comes despite the Bank of England’s rate rise in the summer, which saw the base rate move from 0.50 per cent to 0.75 per cent. It also follows a larger trend of the overall two-year fixed rate dropping in recent weeks.
Today’s average two-year fixed rate for a 95 per cent LTV mortgage stands at 3.73 per cent. A year ago it was 4.16 per cent, a year before that, 4.04 per cent, and in September 2013, 5.67 per cent.
Meanwhile, the average five-year fixed rate for a 95 per cent LTV mortgage is currently 4.08 per cent. In September 2017 this stood at 4.50 per cent, a year before that, 4.57 per cent, and in September 2013, 5.38 per cent.
Moneyfacts finance expert Charlotte Nelson says: “For first-time buyers who often feel they get the hard end of the stick, this is fantastic news. Many would have expected 95 per cent LTV rates to rise, but instead… rates have not just simply fallen but have in fact reached their lowest levels our records began.
“With 95 per cent LTV borrowers often seen as the lifeblood of the market, providers are keen to be seen as the go-to lender for this vital group, not only for the positive message this brings, but also so they can better rejuvenate their mortgage book with new customers… the number of lenders has also grown in this sector, jumping by 10 in two years to stand at 58.
“Rate-wise, things have never looked better for first-time buyers, however these deals still have significantly higher rates than the rest of the market. So, if borrowers are at all able to save even an extra 5 per cent to move them into the 90 per cent LTV bracket, they will be financially better off.”
Additional data from Moneyfacts also show that since the collapse of Lehman Brothers in 2008, the number of 95 per cent LTV deals has grown from 80 to 300.
Source: Mortgage Strategy