High-LTV product choice reaches highest point since 2008 – Moneyfacts

Moneyfacts figures show that this represents around 19% of the residential mortgage market overall, with the firm saying the choice is at an 18-year high.

Looking at the 95% LTV tier, product choice is around 464 deals, while at 90% LTV, the number of deals has hit 896. This is the highest since March 2008, with the product numbers for 95% LTV coming to 575, while it stands at 957 for 90% LTV.

The report found that products overall have increased month-on-month to 7,062 options, the highest count since October 2007.

The average mortgage rates for overall two- and five-year fixed rates decreased by 0.05% and 0.01% to 4.96% and 5% respectively. Average rates were last lower in September 2022 at 4.24% and May 2023 at 4.97%.

The average two-year tracker variable mortgage has decreased to 4.66% and the average standard variable rate (SVR) is priced at 7.32%.

Sponsored

The power behind the process: celebrating administrators

Sponsored by Pepper Money

Rachel Springall, finance expert at Moneyfacts, said the government has been “adamant that they want lenders to do more to boost UK growth, so a rise in mortgage choice is positive”.

“However, it may be a bit too soon to celebrate, as affordability remains a critical hurdle for buyers, and those who want to secure their repayments for the next five years will find higher LTVs are only dropping by miniscule margins. Indeed, the average 95% and 90% LTV five-year fixed rates fell by just 0.02% and 0.01% month-on-month,” she noted.

Springall said the margin of falls to the overall average fixed mortgage rates had shrunk month-on-month, which was attributed to the “unsteadiness of swap rates”.

She pointed to 0.01% being shaved off the average five-year fixed mortgage rate, while 0.05% had been taken off the two-year equivalent, which compares to 0.07% and 0.08% respectively a month prior.

“Longer-term fixed rates are not seeing significant shifts, as over the past 12 months, the average two-year fixed rate has dropped by three times as much as its five-year counterpart (0.6% versus 0.2%).

“Overall, the drop of just 0.04% to the Moneyfacts Average Mortgage Rate during August does not bode well for borrowers who were hoping for a rate war, but it is worth pointing out that economic unrest typically leads to rising swap rates, which forewarn lenders,” Springall noted.

She said lenders can “adopt a more cautious approach to pricing their mortgages when swap rates rise, leading to small margins of moves, but deals can still be reviewed”.

“During August, the average shelf life of a deal was unchanged month-on-month at 17 days, so the churn of products did not calm. Therefore, borrowers will not want to miss out on securing a new deal, such as those remortgaging.

“In fact, those looking to stay with the same lender could secure a new deal four months before their current initial rate ends. This window has been shortened from six months by a handful of lenders since last year, as rate volatility calmed, so it could change if rates were to rise dramatically,” she explained.

First-time buyers may feel “it’s not quite the right time to get a mortgage if they are struggling with the cost of living”.

However, as lenders have been relaxing stress testing over recent weeks and this was boosted by loan-to-income (LTI) multiples, so buyers “might be surprised to find they could now get their first foot on to the property ladder”.

“Affordable housing remains a key issue, so there is always more room to help first-time buyers, who remain the lifeblood of the mortgage market,” she added.