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Lieke Braadbaart

Online Writer
Published: 22/01/2018
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It's been three months since the Bank of England decided to increase the base rate from 0.25% to 0.50%, but while most mortgage rates have seen a similar rise, those at 95% loan-to-value have bucked the trend. With averages actually seeing a fall, prospective first-time buyers have every reason to cheer.

Welcome competition for first-time buyers

Since base rate rose in November, the average two-year fixed rate at 95% loan-to-value has dropped by 0.12%, now sitting at 4.09%. The average five-year equivalent, meanwhile, has fallen by 0.01% to 4.49%. Combine this with the Government's decision to scrap stamp duty for first-time buyers, and it's a pretty good time to take that first step onto the property ladder.

Charlotte Nelson, finance expert at, suggests that increased competition is the cause: "Providers have started the new year with a bang, as they compete to be seen as the go-to lender for first-time buyers. Many lenders are likely to be looking to get new borrowers into their mortgage books. Especially as older borrowers are likely to be coming to the end of their mortgage term, it seems prudent for lenders to replace them with new customers.

"The products on offer aren't just standard products either, with an array of different incentive packages and fees, allowing borrowers to tailor their mortgage to their own needs. Borrowers at 95% LTV could receive an average amount of £419 in cashback on a fixed rate deal, which is a welcome boost to those who are cash-strapped."

However, while it's good to see that providers are valuing those borrowers with only a 5% deposit to offer, Charlotte also pointed out that rates had been rising prior to the base rate increase. Indeed, as the table below shows, the averages are still not back to the record lows seen in January 2017.

Average Rates Jan 17 Jul 17 Oct 17 Today
Two-year fixed rate at 95% LTV 3.89% 4.24% 4.21% 4.09%
Five-year fixed rate at 95% LTV 4.37% 4.55% 4.50% 4.49%

Caution still required

So, while rates are better than they could be, they are certainly not as low as they have been. As always, it's important to compare mortgage deals carefully, to make sure that you get at least a better-than-average rate.

Additionally, Charlotte warned that "high-LTV rates are still significantly higher than the rest of the market. For example, the average two-year fixed rate at 90% stands at 2.65% today – meaning borrowers who are able to save the extra 5% could save a whopping £153.22 a month, or £1,838.65 a year [based on a £200,000 loan over 25 years]."

Easier said than done, but with Government schemes such as the Help to Buy ISA and Lifetime ISA offering monetary help, a 10% deposit might be closer than you think. If you're not convinced you need a bigger deposit, compare our first-time buyer mortgage chart with the general fixed mortgage charts – you'll find some 90% LTV mortgages in the Best Buys which could very well change your mind.


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. Links to third parties on this page are paid for by the third party. You can find out more about the individual products by visiting their site. will receive a small payment if you use their services after you click through to their site. All information is subject to change without notice. Please check all terms before making any decisions. This information is intended solely to provide guidance and is not financial advice. Moneyfacts will not be liable for any loss arising from your use or reliance on this information. If you are in any doubt, Moneyfacts recommends you obtain independent financial advice.

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