There was more good news for anyone looking to remortgage this week, as the latest quarterly product analysis revealed the plummeting cost of high loan to value (LTV) mortgages. The cost of a two year tracker at 90% LTV is now 4% lower than it was at the beginning of October, and these types of deal are not just becoming cheaper; they’re becoming more plentiful, too. The number of 95% LTV deals on the market has reached a post-recession high, rising by 84% year-on-year to 260 in November. High LTV mortgages, it seems, are very much back in fashion.
Uncertainty over the base rate, the buy to let sector and the future of property prices means that we have begun 2016 with the mortgage market in a state of turmoil. This is partly why we have seen such specific offerings popping up; the recent buy to let product releases are another example, as lenders identify certain niches to focus on in the short term. We should not necessarily bank on these products sticking around in the long term; and it is therefore important to take advantage while the window is still open.
Once, these high LTV mortgages were rarer than hen’s teeth. Now, there are even some sub-3% deals available, indicative of increased competition among lenders at the higher end of the LTV scale. Yorkshire Building Society has announced a two year fixed rate of 2.59% for borrowers with a 10% deposit, as part of a range of rate reductions across its 90-95% LTV products. A 3.88% mortgage, also fixed for two years, is available for those with a 5% deposit. Lenders’ desire to compete for these borrowers is behind the sheer number of products currently on the market.
High LTV mortgages: who will benefit?
Deposit considerations can make it difficult for first time buyers – and home movers – to qualify for a loan. For anyone with a small deposit, these deals will be a helping hand onto the housing ladder; as average rates for low-deposit mortgages continue to fall, affordability for those borrowers will improve.
The government’s focus on Help to Buy is driving demand and, with changes to stamp duty meaning more suitable properties are expected to come onto the market, the pattern is expected to continue.
It is also an important development for anyone who currently has a high LTV mortgage. We are in prime remortgage season, and much more competitive rates are now available to those borrowers who take the plunge. If you are thinking of remortgaging, however, but are pushing it back for the moment, we would urge you to capitalise and fix while these deals are still available. Uncertainty in the market means things could change quickly.
As ever, if you have any questions, please do get in touch with us at Enness. One of our specialist brokers will be delighted to talk through your options with you.