"The more worrying trend remains an increase in average rates for 95% LTV borrowers"
The gap between 75% LTV and 95% LTV rates has widened to 1.56% as lower-LTV rates fall while 95% LTV products have risen to an average of 3%, according to new data from AmTrust.
Although the average first-time buyer house price has dropped to £222,676 - meaning the average deposit required has dropped slightly - those with 5% deposits are paying over 51% more each month and year for their mortgages compared to those who are able to put together a larger deposit.
Those with a 5% deposit will pay just over £1,000 per month on average for their mortgage, while those with a 25% deposit can expect to pay £663.
AmTrust said the theme of average rates rising for those seeking 95% LTV mortgages had continued throughout the tail-end of 2019.
Despite this, AmTrust says there is a degree of positive news for first-time buyers with 5% deposits as the number of products available to them increased following two consecutive quarters of falls.
This has not been matched in the 75% LTV categories which showed some drops in product availability for all terms/all mortgage deals. AmTrust said this might be as a result of lenders like Tesco Bank and Sainsbury’s Bank leaving the market, and other lenders readjusting their offerings to these changes.
However there are still over six times as many products in the 75% LTV categories compared to 95% LTV.
Patrick Bamford, business development director at AmTrust, commented: “There has been a slight upturn in terms of product choice for 95% LTV borrowers in this latest version of our LTV Tracker with, for the first time in two quarters, an increase in product choice for those with a 5% deposit.
“The more worrying trend remains an increase in average rates for 95% LTV borrowers and an increase in the rate differential between these first-timers and those with a 25% deposit. We still see the latter group paying 50% less each month in mortgage payments than high LTV borrowers, and this is a trend that shows no sign of changing.
“We are in danger of creating a mortgage/housing market which can only be accessed by those with family support and this is likely to mean significant numbers of potentially credit-worthy borrowers not being able to become home-owners.
“With a new Government in place, the market will be watching March’s Budget very closely to see if there is any further support to be provided to first-timers, plus of course next year the Help to Buy Scheme will be changed so it is only accessible by first-timers. However, what we need to see is a greater focus on providing high LTV loans, not just for those starting their property journey but those already on the ladder who might wish to move up.
“Regulatory factors play a major role in curbing the amount of high LTV lending lenders can currently write, and we would like to see these addressed and amended, in order to allow lenders to write more business with those borrowers who do not have the support of family and friends to get on the ladder.”