First Time Buyer Mortgage Fixed Rates Tumble to Record Lows

By: MoneyFacts

Moneyfacts UK Mortgage Trends Treasury Report data, not yet published, shows the average two-year fixed rate at max 95% loan-to-value (LTV) is at a record low while the choice of all fixed rate products available at max 90% LTV is at its highest on record.

Darren Cook, Finance Expert at Moneyfacts, said:

“With first-time buyers (FTBs) being the essential lifeblood of the housing and mortgage market, it is encouraging to see that potential new homeowners now have a greater number of mortgage options available at the higher LTV tiers, as well as lower initial interest rates in the two-year fixed sector, to choose from.

“The latest figures show that the average two-year fixed mortgage rate at max 95% LTV has fallen from 4.15% this time last year to a record low of 3.54% this month. It is meaningful to note that this significant fall of 0.61% over the past 12 months is despite the Bank of England increasing the base rate by 0.25% in August this year.

“In comparison, the average two-year fixed mortgage rate at max 60% LTV has increased by 0.12% year-on-year, max 70% LTV by 0.26%, max 75% LTV 0.25% and max 85% LTV has risen by 0.21%.

“However, for those with a smaller equity/deposit, the good news continued. Alongside the fall in the average rate of max 95% LTV deals, the Moneyfacts UK Mortgage Trends Treasury Report reveals that the number of fixed mortgage deals available at max 90% LTV has increased by 101 products during the past 12 months to reach a record high of 656. The number of fixed mortgage deals available at max 95% LTV stands at 304 this month, four products less than the record of 308 available in August this year.

“The higher LTV market looks to be showing healthy competition between providers as they vie for FTBs’ attention, however this seems to be moving in a completely different direction to the tiers that call on much larger deposits or require a greater portion of equity.

“Prospective FTBs should start to consider their options and make a comparison of mortgage products that may best suit their requirements, as choosing a good deal could save significant sums in the long run.”

The Moneyfacts UK Mortgage Trends Treasury Report, out later this week, provides an in-depth monthly review of today’s changing mortgage trends, including all the relevant facts on the UK’s residential and buy-to-let markets.

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