Lenders have their eyes fixed firmly on the first-time buyer mortgage market as 90% loan-to-value (LTV) deals have risen 44% over the last two years, but across the board, rates nudge upwards.
Analysis by Moneyfacts revealed an increase of 300 in the number of 90% LTV deals since February 2024, taking product choice in this lending bracket to its highest level of 981 since records began.
Choice for borrowers with a 5% deposit has also rocketed, rising from 274 to 537 over the same period – the highest count since March 2008.
Mortgage rates rise
Over the last month, however, mortgage rates have started to rise.
Month-on-month, average two-year fixed rates for 90% LTV deals rose from 5.09% to 5.1%, while five-year deals increased from 5.07% to 5.09%.
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A bigger rise was recorded among 95% LTV deals, with the average two-year fixed rate rising from 5.29% to 5.42% and average five-year fixes rising from 5.33% to 5.41%.
SVRs reduce
Remortgage customers will find the incentive to switch has intensified, as fixed rates are substantially lower than the average standard variable rate (SVR).
The average SVR fell to 7.15% month-on-month, now down by 0.63% year-on-year from 7.78%. The highest recorded was 8.19% during November and December 2023. However, those coming off a fixed deal from 2021 could see their repayments rise.
Rachel Springall, finance expert at Moneyfacts, said: “This year is setting itself up to be a fruitful one for first-time buyers, and really, they need all the help they can get amid the lack of affordable housing. Despite the volatility in mortgage rates over recent weeks, and a typical seasonal slowdown in activity that resulted in a rise to the average shelf life of a deal to 33 days, the latest boost to product choice and sentiment towards relaxing stress tests will be encouraging news to borrowers.
“The rise in choice included the entry of specialist lender West One onto our systems during January, but also from Penrith Building Society launching higher-LTV options. While a helpful boost, there is much more room for improvement to improve choice and competition at the higher-LTV spectrum.”
