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13th December 2019
Mortgage rates continue to favour first-time buyers, says Moneyfacts
Moneyfacts UK Mortgage Trends Treasury Report reveals that the average two-year fixed rate at maximum 95 per cent loan-to-value (LTV), has decreased from 3.27 per cent to 3.25 per cent since last month and the average two-year fixed rate at 90 per cent LTV, has decreased from 2.66 per cent to 2.62 per cent.
The average five-year fixed rates at the higher LTV tiers have also fallen during November, with the maximum 95 per cent LTV decreasing from 3.60 per cent to 3.57 per cent, and the average rate at 90 per cent LTV decreasing from 2.96 per cent to 2.94 per cent.
Darren Cook, Finance Expert at Moneyfacts, said: “First-time buyers or those borrowers seeking higher LTVs seem to have benefited the most during November, as providers appear to be once again competing for this business by driving interest rates down.
“During the latest round of competitive cuts, it appears that mortgage providers are lowering rates for those with a smaller deposit, with the average rates at 90 per cent and 95 per cent seeing greater reductions than their lower LTV counterparts. This follows a summer of fairly muted activity at the riskier, higher LTV tiers, following the warning issued by the CEO of the Prudential Regulation Authority in May that the Bank of England is watching mortgage rates ‘like a hawk’.
“With the average two-year fixed rate at 95 per cent LTV falling by 0.02 per cent over the past month and the average rate at the 90 per cent LTV tier decreasing by 0.04 per cent, the disparity between these rates has now widened to 0.63 per cent. Meanwhile, the average five-year fixed rates at 95 per cent and 90 per cent LTV have fallen by 0.03 per cent and 0.02 per cent respectively during November, meaning the disparity between these average rates also stands at 0.63 per cent.
“The difference in average rates between 90 per cent and 95 per cent LTV tiers has historically always been greater than differences in average rates between LTVs lower down the tier scale, so it is always worthwhile for a potential first-time buyer to try to raise an additional deposit and attempt to step down the ladder to find a deal offering a more favourable interest rate.”