July 26 2014 Latest news:
Adam Aiken, Editor
Friday, May 13, 2011
There is some brighter news for mortgage borrowers who have deposits of just 10pc, with the average rate falling to a three-year low.
It is the first time the average rate for a two-year fixed mortgage has dipped below 6pc since March 2008, according to the data-crunchers at Moneyfacts.co.uk. The news is likely to be particularly welcome to first-time buyers, who typically have lower deposits than people who are already on the housing ladder.
The current average rate of 5.98pc is 0.4pc lower than 12 months ago. Although rates have fallen across the board during that time, it is mortgages for 90pc of a property’s value that have seen the biggest reductions.
There is also more choice available. The number of deals available to borrowers with deposits of 10pc has increased by more than 40pc to 229 while the number of lenders offering these products has risen from 31 to 48 over the past year.
Michelle Slade, a Moneyfacts spokesman, said: “Over the last year, lenders have witnessed increased consumer demand for a return of 90pc loan-to-value (LTV) mortgages.
“It has taken some time but it appears they are finally listening. The increased competition in the 90pc LTV tier has resulted in a large reduction in rates compared with the same time last year, even though the Bank of England base rate has stagnated.
“The news will be a boost to first-time buyers who have been left with limited options over the last few years.”
However, Miss Slade added: “While the mortgage market continues to show improvements for those with smaller deposits, the picture isn’t entirely rosy.
“Just because the products are on the shelf doesn’t mean they are within easy reach. Mortgage availability may be improving but mortgage approval figures remain subdued.
“The mortgage market still has a way to go before it returns to any sort of normality.”
Elsewhere, the average rate for a two-year fixed mortgage has fallen from 4.21pc to 4.02pc over the past 12 months for people who want to borrow up to 75pc of the value of a home.
For those borrowers who can stump up deposits of 40pc, the average rate has fallen from 4.06pc to 3.91pc over the same period.