95% LTV product choice increases as rates fall further: AmTrust

Mortgage costs are continuing to fall across a range of LTVs, however Q4 saw an increase in product choice for 95% LTV borrowers whilst 75% LTV product numbers fell, according to the latest data from AmTrust.

Related topics:  Mortgages
Rozi Jones
14th January 2019
patrick bamford genworth
"To see the average 95% LTV mortgage rate not too far away from 3% is most pleasing, and the differential between higher and lower LTV products has narrowed significantly."

The average mortgage rate at 95% LTV dropped from 3.61% in Q3 to 3.23%, while there was a very slight drop in average rates for 75% LTV borrowers, with a quarterly fall from 1.75% to 1.74%.

The rate differential between 75% and 95% LTV loans has continued to narrow, down to 1.49% from 1.86% in Q3 and 2.21% in Q2 last year.

Greater appetite to lend to first-time buyers with small deposits continues to translate into greater product choice for 95% LTV borrowers.

Two-year product options at 95% LTV topped 100 for the first time, while those looking at all mortgage terms and options have more than 240 products to choose from.

But, while the differential between 95% LTV and 75% LTV products has been narrowed, the data shows that borrowers with a 25% deposit have access to over six times as many products as their lower deposit counterparts.

Over 700 products are available to those wanting a two-year deal, while this number more than doubles to over 1,500 products for those reviewing all terms and all product options.

The monthly mortgage cost disparity for average first-time buyers seeking averagely-priced homes also continues to be high, with 95% LTV borrowers continuing to pay close to 50% more for their mortgages than those at the 75% LTV level.

Those with smaller deposits pay (on average) £780 per month/£9,360 each year, while those with 25% deposits pay £521 per month or £6,252 per year.

Patrick Bamford, business development director at AmTrust Mortgage & Credit, commented: “Clearly, over the last year we have seen a renewed interest in the high LTV first-time buyer mortgage market from a number of lenders, and this increased competition has led too far greater product choice plus more competitive rates.

“To see the average 95% LTV mortgage rate not too far away from 3% is most pleasing, and the differential between higher and lower LTV products has narrowed significantly, especially in the second half of 2018.

“It should however not be forgotten that the average rate for a 75% LTV first-time buyer is 1.74% and product choice for this group of potential borrowers numbers many hundreds, if not, thousands, compared to (at best) 200-plus for those with just a 5% deposit.

“Indeed, there are six times as many products available for 75% LTV borrowers and this disparity is far too great. We have seen more lenders launching products in this marketplace, and we suspect that as the ongoing uncertainty of Brexit impacts further on the housing and mortgage markets, that we’ll see many more lenders looking to diversify into this area. But, at best, this might add tens of products to the choice available, rather than the hundreds which might signal a real resurgence in the first-time buyer/high LTV mortgage market.

“Lenders do have the tools at their disposal to mitigate their risk in this area and to continue to help bring rates down and product numbers up, and we would urge them to follow the lead of many building societies that utilise private mortgage insurance in order to improve their activity in this vitally important part of the market.”

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