First-time Buyer 

Rates on high LTV products up since start of 2019

Rates on high LTV products up since start of 2019

The average cost of high loan to value mortgages has increased since the start of the year.

The latest figures from Mortgage Brain showed the cost of a 90 per cent LTV two-year fixes is now 5 per cent higher than it was three months ago, averaging at 2.36 per cent.

The cost increase equates to £342 a year on a £150,000 mortgage.

Two-year tracker and five-year policies now cost 1 per cent more than in January, while the cost of an 80 per cent LTV three-year fixed and two-year tracker have increased up 0.5 per cent over the same period.

Borrowers with a bigger deposit or those looking to remortgage can take advantage of reductions in the market, as data shows a slight fall in the cost of 60 per cent LTV products compared to the start of the year.

But longer term analysis showed an overall decline in the cost of both high and low LTV products when compared to last year.

A 60 per cent LTV two-year fixed is now 3 per cent cheaper than it was in April 2018 while five and two-year fixed products for those with a 10 per cent deposit are both 2 per cent cheaper than 12 months ago.

Based on a £150,000 mortgage, borrowers looking to take out one of these mortgages could now benefit from an annual saving of up to £198.

Mark Lofthouse, chief executive of Mortgage Brain, said: “While those with small deposits are faced with a number of cost increases compared to the beginning of the year, our longer term analysis shows that the majority of borrowers can still benefit from a number of savings compared to this time last year.”

Nicholas Morrey, an adviser at John Charcol, said: “To see lenders increase the cost of high loan to value lending when lower loan to value loan rates are marginally falling is disappointing since the housing market needs first time buyers to help stimulate activity and increase transaction levels.  

“That said, rates are still extremely low and the cost of owning your own home has rarely been lower.”

Mr Morrey said the increase may be accounted for by a rise in swap rates — the rates behind the fixed rates — which were at a historic low in January.

He said: “Given that overall, the swap rates for the last months have been at similar levels as they were before the last BoE rate increase, an uptick was generally expected.”

But Kevin Dunn, director at Furnley House, said these rises would not have a massive effect on the first-time buyer market.

He said: “These relatively minor rises could be just seasonal variances. Rates are still at a historical low, together with their being a number of initiatives for first time buyers, leaving me to conclude this will not have a massive if any effect on the first time buyer market.”

imogen.tew@ft.com