95% LTV rates are rising

Ryan Bembridge

July 24, 2017

Typical 95% loan-to-value mortgage rates have risen considerably so far this year, moneyfacts data shows.

In January 2017 95% LTV 2-year fixes cost 3.89% but by July 2017 that amount rose by 0.35% to 4.24%.

And it’s a similar story with 95% LTV 5-year fixes, which have gone from costing 4.37% in January to 4.55% in July, a rise of 0.18%.

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Charlotte Nelson, finance expert at moneyfacts, said: “The increase can be largely explained by the inflationary pressures the economy is facing. As inflation rises, borrowers’ incomes get eaten away and the probability of a borrower defaulting rises. The added speculation of a possible base rate rise in the near future has seen providers re-evaluate the lows that borrowers were starting to get used to.

“First-time buyers might feel like they can never catch a break, facing large deposits and now rising rates, but it is not all doom and gloom, with more deals on the market at current than at any time since the financial crisis.

“With the Bank of England scrutinising high LTV lending, this upward pressure on rates looks like it may continue. So borrowers looking for a deal at a higher LTV will need to act now if they want to make the most of low rate deals before their time is up.”

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