95% loan to value mortgages cheapest since records began
The battle is on to win the business of first time borrowers. And struggling would-be home-owners are the winners.
First time buyers with only 5% or 10% deposits are being offered cheaper deals and more fixed-rate mortgage products than ever before.
Data collected by Moneyfacts shows that the average two-year fixed rate for 95% loan to value (LTV) mortgages fell by 0.61% in the 12 months to December, despite the Bank of England increasing the base rate for borrowing by 0.25% last summer.
Better deals on two-year fixes
- In the past 10 years the number of two-year fixed rate mortgage products offered to borrowers has multiplied from 17 to 304.
- And over the same period the cost of borrowing on a two-year fix has nearly halved: from 6.52% to 3.54%.
Cheaper borrowing for 10% deposits
- Borrowers who can get together a 10% deposit can now choose from 656 mortgage products, compared with 102 offered a decade before.
- And their cost of borrowing has dropped from 6.53% to 2.7%.
Competition to sign up first time buyers
A greater choice of mortgages, and lower initial interest rates on two-year fixes are a boon for struggling first-time homeowners.
And this trend contrasts with the offerings to borrowers who can put down larger deposits or have already built up more equity in their homes.
Darren Cook from Moneyfacts says “The higher LTV market looks to be showing healthy competition between providers as they vie for FTBs’ attention.”