Borrowers without a large deposit are benefitting from a wider choice of deals and lower rates

Low deposit deals fall to record low rates

The average two-year fixed rate for borrowers with just a 5% deposit is at a record low, according to Moneyfacts.

The financial information provider said that two-year fixed rates up to 95% LTV have fallen to 3.54%, from 6.52% 10 years ago.

For those who can muster 10% upfront the average two-year fixed rate has fallen from 6.53% a decade ago to just 2.7% today.

More choice

There are now 304 95% fixed deals available to borrowers with a small deposit, up from 17 10 years ago.

And the number of 90% LTV deals rose from 102 to a record 656 over the same time period.

Darren Cook, finance expert at Moneyfacts, said: “With first-time buyers (FTBs) being the essential lifeblood of the housing and mortgage market, it is encouraging to see that potential new homeowners now have a greater number of mortgage options available at the higher LTV tiers, as well as lower initial interest rates in the two-year fixed sector, to choose from.

“It is meaningful to note that this significant fall of 0.61% over the past 12 months is despite the Bank of England increasing the base rate by 0.25% in August this year.

“The higher LTV market looks to be showing healthy competition between providers as they vie for FTBs’ attention, however this seems to be moving in a completely different direction to the tiers that call on much larger deposits or require a greater portion of equity.

“Prospective FTBs should start to consider their options and make a comparison of mortgage products that may best suit their requirements, as choosing a good deal could save significant sums in the long run.”

Article originally posted by Your Mortgage