Moneyfacts: Rates drop the most at higher LTV products

Michael Lloyd

December 9, 2019

In November rates have dropped the most at higher loan-to-value (LTV) products, Moneyfacts has found.

The average 2-year fixed rate at a maximum 95% LTV has decreased by 0.02% from 3.27% to 3.25% since last month and the average 2-year fixed rate at 90% LTV has fallen by 0.04% from 2.66% to 2.62%.

Furthermore, the average 5-year fixed rates at the higher LTV tiers have also decreased during November, with the maximum 95% LTV dropping by 0.03% from 3.60% to 3.57% and the average rate at 90% LTV down by 0.02% from 2.96% to 2.94%.

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% and 95% 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 chief executive of the Prudential Regulation Authority in May that the Bank of England is watching mortgage rates ‘like a hawk’.

“The difference in average rates between 90% and 95% 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.”

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