Rates double for 90pc LTV mortgages
The analysis, a breakdown of all main product types in the UK mortgage market for a repayment mortgage, is calculated by the lowest rate for a property worth £180,000.
Latest figures – as of 1 October 2013 – show that the lowest rate for a 90% 2-year Fixed mortgage (at 3.54%) is now 2.39 times higher than the lowest rate product with a 60% LTV (1.48%).
The difference between the lowest rate 60% and 90% LTV Tracker is almost as great – 2.1 times (or 112%) higher, with the lowest rates currently standing at 1.69% (60% LTV) and 3.59% for a 90% LTV product.
The gap between the two LTV bands has also widened since the start of the year – up 21% – when the 90% LTV 2-year fixed was listed as being 1.98 times more than the lowest rate 60% LTV product.
Converted to actual cost over a two year period for a repayment mortgage, the lowest rate 2-year fixed mortgage with a 90% LTV is now calculated to cost borrowers 25% more than the lowest rate 60% product (up from 12% more in January 2013).
Similarly, borrowers looking for a 90% 2-year tracker will face an 18% increase in the cost for the repayment compared to the lowest rate 60% LTV product.
Mark Lofthouse, chief executive officer of Mortgage Brain, said: “Whilst our current data shows the marked interest rate differences between LTV bands for trackers and fixed rate mortgages, our latest analysis has also shown that interest rates, on the whole, have dropped significantly over the course of the year.
“The interest rate for a 60% LTV 2-year fixed, for example, has dropped almost 26% since that start of the year – down from 1.99% in January to 1.48% at the start of October.
“Trackers with a 60% LTV have seen an even bigger rate drop – down 32% since January 2013, dropping from 2.49% to 1.69%.”
It’s a similar trend for 90% LTV products with a 10% interest rate drop being seen for a 2- year fixed compared to the start of the year and a 7% rate drop for a 90% 2-year tracker.
Mortgage Brain’s new analysis also gives a clear picture of interest rate movement and repayment cost in the buy-to-let market with the current data showing a 66% difference in the interest rate between a 60% and 80% LTV 2-year fixed, and a 77% difference between a 60% and 80% 2-year tracker.