For the last few months, the high loan-to-value (LTV) market has been on a bit of a downturn, with rates starting to creep up and product availability diminishing. However, this month signals a reversal of fortune – not only has the number of high-LTV mortgages available hit a record high, but average rates are falling!
The figures, taken from the latest Moneyfacts UK Mortgage Trends Treasury Report, show that the number of residential mortgages available has hit a record high of 4,657 this month, an increase of 53 from July – and looking closer at the figures shows that this increase has been driven by product increases at high LTVs.
The number of mortgages available at 90% and 95% LTV has risen sharply this month, while the remaining tiers have seen availability either fall or remain unchanged. Indeed, the 95% LTV tier saw an increase of 16 products, pushing it to 276, the highest figure seen since April 2008 – a post-crisis high – while the 90% LTV tier saw its product count rise by 17 to 649, the highest seen since February.
It's particularly interesting to note that availability at 95% LTV is now higher than it was in December last year, just before the Government's Help to Buy mortgage guarantee scheme (otherwise known as H2B) was withdrawn. Since then, availability had started to falter as providers adjusted to the market, but it appears that they've done so now– they're getting comfortable lending at higher LTVs without Government support, and are boosting their product range accordingly.
And that's not all – average mortgage rates are falling, too, with our figures showing that the average two-year fixed mortgage rate at 95% LTV now stands at 4.18%, a drop of 0.07% and reversing last month's rise, putting it back to the level seen in June. The average at 90% LTV has also fallen by 0.07% to stand at 2.70%, a new record low – beating the previous low of 2.71% set in February this year – as competition returns to this sector.
All of this is great news for first-time buyers! More mortgages to choose from equals a better chance of being able to snap up a good deal, and thanks to rates being so low, repayments could be just as minimal. However, before you take the plunge, just make sure your credit score is up to scratch – follow these tips on how to improve your credit score if necessary – otherwise you won't be able to get the best first-time buyer mortgage rates.
The same kind of thing applies when it comes to your deposit. While it's perfectly possible to buy a house with a deposit of just 5% – the rise in products at 95% LTV is testament to that fact – you'll find that you can access far cheaper mortgage rates if you can save a bit more, so holding fire for a little longer could pay off in the long run.
Find the top first-time buyer mortgage rates
Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.