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Average rates for high LTV mortgages drop

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First-time buyers are being encouraged to save a larger deposit to buy their first home, as rates for those with a ten per cent deposit are falling at a faster pace than for borrowers who need a 95 per cent loan to value mortgage.

According to Moneyfacts, the average two-year fixed rate at 95 per cent loan-to-value (LTV) decreased by 0.02 per cent to 3.25 per cent from October to November. The average two-year fixed rate at 90 per cent LTV decreased by 0.04 per cent to 2.62 per cent.  

The average five-year fixed rate at 95 per cent LTV declined by 0.03 per cent to 3.57 per cent and the average rate at 90 per cent LTV dropped by 0.02 per cent to 2.94 per cent. 

Higher deposits favourable

The data showed that the disparity between the average two-year fixed rate grew to 0.63 per cent from the 0.61 per cent recorded in October. This now aligns with the gap between five-year fixed rates in the 90 and 95 per cent LTV brackets which also stand at 0.63 per cent. 

Darren Cook, spokesperson for Moneyfacts, said: “The difference in average rates between 90 per cent and 95 per cent 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.” 

Good for FTBs 

The recent drop in rates is good news for those stepping on to the property ladder. Figures released by AmTrust in October showed that not only had the rates for products within high LTV tiers increased but the number of products available in this category had fallen.

Cook added: “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.”

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