"The 60% LTV sector has been lenders’ main target for some time, with providers actively seeking to be the lowest ever across the market."
Average 60% LTV rates have continued to fall and now average 1.81%, down from 1.96% in April 2016 and 1.91% in October 2016.
Conversely, average 95% LTV rates are beginning to rise, from 3.95% six months ago to 4.18% today, surpassing the low of 4.15% seen in April 2016.
Charlotte Nelson, Finance Expert at Moneyfacts, said: “With improvements seen throughout the mortgage market of late, particularly for those with a 5% deposit, many would assume that the LTV-gap would have narrowed or even been bridged. However, it is disappointing to find that the reverse is true, with the gap bigger now than it was five years ago.
“Deals on the market today can seem worlds apart, particularly when you look at the lowest deals available on the market. For example, the lowest two-year fixed rate on the market at 60% LTV is 0.99%, whereas the lowest at 95% stands at 3.29% - a whopping 2.30% difference.
“The 60% LTV sector has been lenders’ main target for some time, with providers actively seeking to be the lowest ever across the market, and it is this intense competition that has seen the gap grow despite average rates for higher LTVs also falling.
“There will always be a difference between the two sectors due to the extra risk involved in lending to a borrower who has just a 5% deposit, compared to those who have a much larger deposit.
“First-time buyers should not be discouraged, however, as borrowers sitting close to the 90% LTV bracket could reduce their monthly repayments by saving that little bit extra to be able to move to the lower band. With plenty of deals now out there, borrowers at any LTV have the pick of the bunch, so they would be wise to shop around to assess the options that are available to them.”
