Mortgages  

Higher LTVs see biggest rate cuts during 2019

Higher LTVs see biggest rate cuts during 2019

Higher loan-to-value fixed rates saw the largest interest rate cuts during 2019, as mortgage lenders competed for first-time buyer business.

According to Moneyfacts, the average two-year fixed rate at the maximum 95 per cent LTV tier fell by 0.22 percentage points from 3.46 per cent in January to 3.24 per cent in late December.

This compared to a fall of just 0.08 percentage points to 2.44 per cent across all two-year fixes.

Meanwhile the average 10-year fix at 95 per cent fell by 0.96 percentage points from 5.05 per cent to 4.09 per cent during 2019.

Across all 10-year fixes the fall was just 0.27 percentage points.

Darren Cook, finance expert at Moneyfacts, said: "This is fantastic news for prospective first-time buyers who have been planning and saving up to get their foot on the property ladder in 2020. 

"There has been a concerted drive by mortgage providers during 2019 to try and secure the business of potential first-time buyers, who are the lifeblood of the mortgage and property markets, and it is encouraging to see rates decrease as a result of some healthy competition."

The average rate for five-year fixes at 95 per cent LTV fell by 0.31 percentage points, compared with a fall of 0.21 points across all five-year fixed rate mortgages.

David Hollingworth, associate director at L&C Mortgages, said: "Competition is tough for lenders that have found it hard to cling onto margin but that has been good news for consumer choice.

"As lenders have fought to differentiate from their peers they have been forced to cut rates to attract borrower interest. With margins so fine at lower LTV it has seen rates further up the LTV scale benefit as more lenders have improved their options for those with small deposits.

"There’s nothing to suggest that competitive pressure will subside in the coming year, so borrowers should continue to benefit from a great choice of low rates no matter how big a deposit they can manage to build."

damian.fantato@ft.com