The three months since the EU referendum has seen the average interest rate gap between 75% loan-to-value and 95% LTV mortgages reach a year-long high, according to the latest AmTrust Moneyfacts LTV tracker.
In September the average interest rate gap between 75% and 95% LTV mortgages peaked at 2.24% last month – a year-long high – with first-time buyers being the most affected.
The vote to leave the EU is seen as an influencing factor, after average rates fall three times faster for those with bigger deposits compared to those with small deposits since the referendum.
As a result of low interest rates, the cost of borrowing continues to fall with the average monthly payment for a 95% LTV mortgage borrower reduced from £822 to £790 between September 2015 and September this year. There were almost 50 75% LTV products available last month which is the highest number since November 2015.
Simon Crone, commercial director at AmTrust International, Mortgage and Special Risks expressed his concern over the EU referendum’s impact on the mortgage market; particularly for those wanting to take their first steps onto the property ladder.
He said: “The worry is that the EU vote has led to a market distortion at the expense of first-time buyers with small deposits. It would be a great shame if the positive steps taken by the industry and the government to improve lending for first-time buyers were undone in the months ahead.”