While the majority of rates in the mortgage market have started to edge up, research from moneyfacts.co.uk shows that some higher loan-to-value (LTV) mortgage rates have actually fallen since the base rate rise.

Charlotte Nelson, Finance Expert at moneyfacts.co.uk, said:

“This is great news for first-time buyers, who often feel they bear the brunt of every negative change in the mortgage market. With the Bank of England increasing the base rate in November, many would have expected inflated rates, particularly for the higher LTVs. In fact, the average two-year fixed 95% LTV mortgage rate has fallen by 0.12% in just three months.

“Providers have started the new year with a bang, as they compete to be seen as the go-to lender for first-time buyers. Many lenders are likely to be looking to get new borrowers into their mortgage books. Especially as older borrowers are likely to be coming to the end of their mortgage term, it seems prudent for lenders to replace them with new customers.

“In the run-up to the base rate rise, providers had already started to increase their rates. A few months later, rates have started to fall again, but both the average two and five-year fixed rate have yet to recover to the moneyfacts.co.uk record lows seen in January 2017.

“The products on offer aren’t just standard products either, with an array of different incentive packages and fees allowing borrowers to tailor their mortgage to their own needs. Borrowers at 95% LTV could receive an average amount of £419 in cashback on a fixed rate deal, which is a welcome boost to those who are cash-strapped.

“While rates falling can only be considered a good thing, borrowers will find that high-LTV rates are still significantly higher than the rest of the market. For example, the average two-year fixed rate at 90% stands at 2.65% today – meaning borrowers who are able to save the extra 5% could save a whopping £153.22 a month, or £1,838.65 a year*.

“For once, borrowers looking at the highest LTVs are starting to positively buck the overall mortgage trend. However, as first-time buyers know all too well, what can fall can also rise again. Therefore, borrowers looking to step on the ladder should start considering their options now to prevent missing out.”

*Based on a £200,000 loan over 25 years.

www.moneyfacts.co.uk - The Money Search Engine

Moneyfacts.co.uk is the UK's leading independent provider of personal finance information. For the last 20 years, Moneyfacts' information has been the key driver behind many personal finance decisions, from the Treasury to the high street.

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