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Lender competition for low deposit borrowers increases – Moneyfacts
The average interest rates charged on mortgages available with a 5% deposit have fallen since the start of the month, according to financial information site Moneyfacts.
It reported that the average two-year fixed rate has dropped from 4.11% at the start of May to 4.06% today. Meanwhile, the average five-year fixed rate has fallen from 4.49% to 4.43%.
As a result, both rates are now lower than they were this time last year, despite bank base rate having risen since then.
Charlotte Nelson, finance expert at Moneyfacts, noted that rates across the board had been increasing in anticipation of a base rate rise in May, which didn’t actually take place.
But while the rest of the market has continued on its upward trajectory, rates on higher LTV deals are “forging their own path”.
Nelson continued: “Competition in this sector is high particularly among lenders looking to revitalise their mortgage book by bringing new borrowers on board. And it is not just rates providers are using to attract these new borrowers, as an array of different incentive packages and fees means borrowers can now tailor their mortgage to suit their needs.”
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Recent months have seen a swarm of lenders launch deals at 95% LTV, including Barclays, Yorkshire Bank and Sainsbury’s.
Back in March, the number of deals available at this LTV topped 300 for the first time since the financial crisis.