It has found that while the average two-year fixed mortgage rate has experienced an increase at all loan-to-values (LTV) in the past month, rates at 95% LTV have seen the biggest rise.
At 95% LTV average two-year fixed rates rose by 0.1% from September compared to a 0.03% increase in the average rate at 60% LTV.
Charlotte Nelson, finance expert at Moneyfacts, said: “The recent upward turn in rates is apparent across the mortgage market, however first-time buyers seem to have been hardest hit, seeing rates shoot up by 0.10% in just one month. This is disappointing news especially considering these borrowers could potentially have to factor in another rate increase if base rate rises as speculated.”
She added: “With interest SWAP rates rising following intense speculation about an imminent base rate rise, many providers are starting to factor in the extra cost. At 95% LTV, providers have an added element of risk if base rate does go up, as the probability of borrowers defaulting on their mortgage could increase. This needs to be factored in.”
Nelson said the rise in rates was a stark reminder to borrowers that there did not have to be an increase in the Bank of England Base Rate for the cost of mortgage borrowing to go up.
She believed this would be frustrating for first-time buyers and urged them shop around for the best rate possible and to seek advice from a financial adviser if they are unsure about their options.