Competition increases for small-deposit homebuyers
The number of products available for borrowers with a five per cent deposit has reached 405, its highest level since May’s peak of 413. This was also the same month as the Bank of England’s Prudential Regulation Authority (PRA) urged caution to the industry on low deposit lending.
The PRA said it would be watching lenders “like a hawk” as it said mortgage price wars had caused lenders to “risk up in ways that are excessive or not properly controlled or capitalised”.
The cost of high loan to value lending has also fallen.
The average rates available on a two and five-year fixed rate mortgage at 95 per cent LTV stand at 3.22 per cent and 3.52 per cent, with respective drops of 0.19 per cent and 0.26 per cent when compared to February last year.
On a monthly basis, the average rate for a two-year fixed rate at 95 per cent LTV has decreased from 3.25 per cent in January and for a five-year fixed, this has declined from 3.56 per cent.
Eleanor Williams, spokesperson for Moneyfacts, said: “As our data shows, the market has picked up since the intervention by the PRA last year. This seems to demonstrate that there continues to be competition among lenders in this ever-expanding section of the market.
“This may in part be due to lenders trying to attract the increasingly young first-time buyers, who they may then be able to keep on their books moving forwards as they remortgage over the years. This is great news for those borrowers who have struggled to find a new mortgage deal due to low levels of equity in their home.”