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More choice for borrowers as mortgage product numbers rise

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Written by: Anna Sagar
08/06/2021
Mortgage product choice has continued to improve and rate competition has stepped up, especially in the higher loan-to-value (LTV) categories, as house prices and property demand continue to grow.

According to Moneyfacts there are around 4,243 mortgage products on the market, which is the highest since the onset of the pandemic and the eighth month of growth.

Product counts increased across the measured categories, which included 95 per cent LTV, 90 per cent LTV and 60 per cent LTV, with 316 more products available compared to last month.

The largest increases were seen in the 95 per cent loan-to-value (LTV) category, with 192 products now available, an increase of 80 from May.

Average two- and five-year fixed rates across all LTVs increased slightly to 2.59 per cent and 2.82 per cent.

For 95 per cent LTVs, the average two-year fixed rate came to 3.88 per cent in June, an increase of 0.6 per cent compared to the same period last year and 0.63 per cent up from the same period in 2019.

Moneyfacts finance expert Eleanor Williams said that this is the lowest rate since last June when there were just 31 deals available.

According to the Bank of England statistics April, May and June are the first months since September last year that average two-year fixed rates have dropped below four per cent for 95 per cent LTVs.

Average five-year fixed rates for 95 per cent LTVs were 4.07 per cent, which is an increase of 1.05 per cent compared to the same period last year and a 0.59 per cent increase from 2019.

Moneyfacts said the average rates for a two-year fixed rates at 90 per cent LTV stood at 3.37 per cent, which is an increase of 1.07 per cent from June last year and an increase of 0.73 per cent from the same period in 2019.

Average rates for a five-year fixed rate at 90 per cent LTV are 3.62 per cent have increased by 1.05 per cent from June last year and 0.59 per cent from the same period in 2019.

Williams added: “The resurgence of high LTV products and the fact that their average rates are beginning to fall is particularly good news for first-time buyers, especially considering that Nationwide Building Society’s recent House Price Index Report found that house prices have risen nearly £24,000 over the past year, meaning that building that five per cent deposit is even harder now.”

Average rates for both two-year and five-year fixed rates for 60 per cent LTV were the only LTV band to see reductions year on year, with rates currently standing at 1.61 per cent and 1.81 per cent.

The rate for two-year fixed rate for 60 per cent LTV is the highest this year so far and is the first time that rates have broached 1.6 per cent since 2019 according to Bank of England figures.

Williams said: “As well as changes in the top LTV tiers, rate competition has become evident at the opposite extreme of the LTV spectrum, with a number of lenders launching eye-catching sub-one per cent mortgage deals in the lowest LTV brackets.

“These record-low rates are available to low-risk borrowers with high levels of equity, but as to whether this competition will extend to higher-LTV deals remains to be seen as we navigate the full economic impact of the last year.”

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