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High LTV competition driving two-year fixed rate mortgages down – Moneyfacts

  • 25/01/2019
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High LTV competition driving two-year fixed rate mortgages down – Moneyfacts
Average two-year fixed mortgage rates slightly decreased in January compared to a month ago as a result of competition at high loan to values (LTVs), according to latest figures from Moneyfacts.


Two-year mortgage rates slightly dropped by 0.02% in January compared to last month, continuing to stand at 2.5%.

However, rates rose by 0.15% from the same month last year, when they were 2.3%.

The two-year fixed rate hit its 2018 high in August when the Bank of England raised the base rate to 0.75%.

However, in September the Bank of England decided to keep its interest rate on hold.

Over the last 12 months, the lowest level was reached in February 2018, when the two-year mortgage rates stood at 2.3%.

A Moneyfacts spokesperson told Mortgage Solutions that towards the end of last year changes to average two-year rates were largely driven by competition in the maximum 95% LTV market.

“The average maximum 95% two-year fixed rate fell from 3.63% on 1 November 2018 to 3.46% on 1 January 2019, while the average two-year fixed rate for up to 60% LTV only fell from 1.90% to 1.89% over the same period.

“However, since the start of 2019, two-year fixed rates seem to suggest lenders are not only focusing on cutting rates at higher LTV tiers but are looking to compete on rate across most loan-to-value tiers.

“Just over three weeks into the new year, the average 60% LTV deal has fallen by two basis points to 1.87% with the 95% LTV tier falling by four basis points to 3.42%.

“It seems that competition for a limited amount of mortgage business may be the driver for these recent cuts, as swap rates appear not to be showing large deviations in price recently.”

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