Rate difference between LTV bands closes
17 October 2014
There has been a sharp reduction in the gap between mortgage rates at different Loan-To-Value (LTV) ratios over the past year, according to mortgage sourcing firm Mortgage Brain’s quarterly product analysis.
As of the beginning of October, the lowest rate five year Tracker with a 90% LTV (at 3.65%) is now just 8% higher than the same product with a 60% LTV (3.39%). The same analysis twelve months ago showed a 71% increase between the lowest rate 60% and 90% LTV products.
Similar reductions have also been seen in the gap between the lowest rate two year Tracker mortgages. In 2013 the lowest rate 90% LTV product was 112% higher than the same product with a 60% LTV – now, the rate difference has dropped to 73%.
However, Mortgage Brain says the buy-to-let sector has behaved somewhat differently with current data showing that the gap between the lowest rate two year Fixed products (60% and 80% LTV) increased from 66% in 2013 to 77% as of October 1st.
In October 2013 the lowest rate two year Tracker with an 80% LTV was 77% higher than its 60% LTV counterpart. A year on and the gap has widened to 87% with the 80% LTV product currently listed with a rate of 3.73% compared to 1.99% for the 60% LTV product.
Commenting on the data release, Mark Lofthouse, Mortgage Brain CEO, said: “Overall the figures from our latest analysis should not come as a huge surprise. With the threat of a rise in base rates ever increasing purchase mortgages were always likely to rise.”
“The drop in the gap between 90% and 60% LTV rates, however, will be welcomed by those with small deposits. It comes on the back of a number of years when the gap was increasing and should help new home owners to take their first steps on the housing ladder,” he added.
*The firm’s analysis, a breakdown of all main product types in the UK mortgage market for a repayment mortgage, is calculated by the lowest rate for a property worth £180,000.