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First-time Buyer

More mortgage misery as rates continue to rise

Nick Cheek
Written By:
Nick Cheek

Mortgage pricing has continued to tick up over the past week, with the largest weekly seen at the higher end of the loan to value (LTV) scale.

The full impact of last month’s core inflation figures and predictions that the Bank of England base rate could ris eto 5.5% have the mortgage market hard with a rise in rates across almost all products from first-time buyer to buy to let.

Indeed, upheaval in the market saw more than 200 mortgages being withdrawn over the weekend. To put that into context, that represents around 4% of the total number on the market, and follows 373 mortgages being pulled from the market in the week to 30 May, according to financial information site Moneyfacts.

Higher LTVs, higher rates

Those mortgages at higher LTVs such as 90% LTV and 85%  LTV have seen the most substantial increases.

According to Rightmove’s latest mortgage statistics, the average two-year fixed rate at 90% LTV rose by 0.4% to 5.51% and the average five-year fixed rate increased by 0.46% to 5.22%.

The average two-year fixed rate at 85% LTV has gone up by around 0.48% to 5.39% and average five-year fixed rate at 85% LTV has risen by around 0.47% to 5.02%.

Other significant increases occurred at 75% LTV, with the average two and five-year fixed rate increasing by 0.45% to 5.24% and 4.88% respectively.

The average two-year fixed rate at 95 per cent LTV went from 5.74% to 6.01%, whilst its five-year fixed rate equivalent rose from 5.27% to 5.5%.

Uncertainty amongst lenders

Rightmove’s mortgage expert Matt Smith said: “We’re now seeing the full impact of the recent inflation numbers coming through, with rates increasing by an average of 0.39% across all LTVs and those with a 10% or 15% deposit hardest hit by these latest rate changes.

“This is a much higher increase than we’ve seen in recent weeks and reflects the uncertainty amongst lenders right now. One factor to keep in mind for those taking out a mortgage soon is that the minimum available rates for each loan size are considerably lower than the average rate, as some lenders try to remain as competitive they can.”

He added that the average mortgage rate for an 85% LTV mortgage stood at 0.47%, the “best-buy” stood at 4.43%.

“This is the first week that we’ve seen average rates of 5% or more in all LTV brackets since early January. We’ve now seen the majority of lenders change their rates after an initially slow response to the inflation figures, and it’s likely lenders will assess the impact of these changes before making further moves,” Smith noted.