According to Moneyfacts, the average two-year fixed-rate at 90% LTV in September 2012 was 5.47% and there were 101 products available. In September 2017 those figures stand at 2.63% and 275 respectively.
Charlotte Nelson, finance expert at moneyfacts.co.uk, said “A lot of the boost in deals could be down to the fact that borrowers may be under the impression that a 95% LTV deal is a rare occurrence, opting to save a little bit extra to put them into the next LTV band instead, and this extra demand is now being catered for.
“With lending at higher LTVs now more the norm, the 90% tier has become a key target for lenders who are looking for a new avenue in which to compete and stand out from the crowd, as other parts of the market start to become saturated.”
95% LTV penalty
Nelson added that the 90% LTV bracket is often considered for first-time buyers, but many borrowers who took out a 95% LTV deal a few years ago could now be starting to weigh up their options for remortgaging into this section of the market.
“Providers who don’t want to lose a chunk of their mortgage book therefore have to up their game by not only offering better choice but also lower rates,” she continued.
“It is not all positive news, however, as borrowers looking for a 95% deal will find that the choice remains small, with the number of two-year deals available standing at 89 today. They will also find the rates are significantly higher, with the average two-year fixed rate at 95% LTV standing at 4.16%. This means borrowers opting to save the extra cash for a 90% LTV deal will be rewarded greatly with a substantial 1.53% difference in rate, making them £122.28 a month or £1,467.36 a year better off on average,” Nelson added.