High LTV mortgage rates drop in November in boost for FTBs

Amy Loddington
9th December 2019
couple children move house first buyer FTB

The upcoming Moneyfacts UK Mortgage Trends Treasury Report, which has not yet been published in full, reveals that the average two-year fix at maximum 95% LTV has decreased by 0.02% from 3.27% to 3.25% since last month and the average two-year fixed rate at 90% LTV has decreased by 0.04% from 2.66% to 2.62%.

The average five-year fixed rates at the higher LTV tiers have also fallen during November, with the maximum 95% LTV decreasing by 0.03% from 3.60% to 3.57%, and the average rate at 90% LTV decreasing by 0.02% from 2.96% to 2.94%.

These lower rates for those at the higher LTVs mean that the mortgage market is still favourable for first-time buyers.

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 CEO of the Prudential Regulation Authority in May that the Bank of England is watching mortgage rates ‘like a hawk’.

“With the average two-year fixed rate at 95% LTV falling by 0.02% over the past month and the average rate at the 90% LTV tier decreasing by 0.04%, the disparity between these rates has now widened to 0.63%. Meanwhile, the average five-year fixed rates at 95% and 90% LTV have fallen by 0.03% and 0.02% respectively during November, meaning the disparity between these average rates also stands at 0.63%.

“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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