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The high loan-to-value (LTV) market has been going from strength to strength in recent years, thanks in no small part to the Help to Buy mortgage guarantee scheme that encouraged providers to lend to those with small deposits. That scheme may now have ended, but it hasn't dampened activity in the sector, with the 90% LTV market in particular noting a definite boost this month.
The figures, taken from the latest Moneyfacts UK Mortgage Trends Treasury Report, reveal that the number of residential mortgage products jumped up by 107 this month to total 4,764, and while the majority of LTV tiers saw a boost in availability, it was the 90% LTV tier that noted a particular increase.
There are now 687 mortgages available at 90% LTV, up from 649 last month and not far from the record of 708 set in April 2008, marking a post-crisis high. At the same time, there's been a slight downturn in the 95% LTV tier, with the number of mortgages available falling by six on a monthly basis to 270, which could suggest that providers are trying to encourage would-be homeowners to save up a little more for a deposit.
However, it could also be that borrowers themselves are becoming more financially savvy and realise that there are better mortgage deals to be found with a 10% deposit than at 5%. As a result, they're holding out until they've saved more funds, and providers are rewarding that commitment by offering a greater number of products – and better rates, too.
After all, the average two-year fixed mortgage rate at 95% LTV is 4.16%, compared with just 2.63% at 90% LTV, so saving an extra 5% could seriously pay off in the long run. Rates are falling faster at 90% LTV as well, with the average having dipped by 0.07% this month compared with the rate at 95% LTV that fell by a lesser 0.02%, so competition is clearly more heightened at the less risky level.
It may not all be about first-time buyers, either, as there's always the possibility that providers are seeking to attract new remortgage customers.
It's often thought that remortgaging is confined to the lower LTVs, yet with the focus on 95% LTV lending over the last few years, there are probably a lot of borrowers who are now looking to remortgage yet are only just in the 90% LTV bracket.
Again, providers are seeking to accommodate those borrowers by enhancing their product range and offering competitive rates, and given that remortgaging activity continues to rise – particularly in the long-term sector – borrowers are only too happy to oblige.
The mortgage market as a whole is continuing to surge ahead, too, with rates falling across the board. The average two-year fixed mortgage rate currently stands at 2.22%, a new record low, after edging down 0.01% on a monthly basis.
The average five-year fixed rate has also fallen, this time by 0.02% to a record low of 2.77%, while the two-year tracker rate is down by the same amount to stand at 1.81%, another fresh low. This all means that, no matter whether you're a first-time buyer, home-mover or remortgagor, now's a great time to consider your options.
Check out the best mortgage rates by heading to our Best Buys, or use our mortgage calculator to find the best deal to suit your circumstances, and always try to build your deposit as much as possible to get the best rates.
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