Research reveals more mortgage choices for 95% loan rates
The number of residential mortgage providers that include a maximum 95% loan to value (LTV) product in their range has increased, the latest comparison figures show.
There are now 60 providers with this product, up from 53 a year ago and 13 more than five years ago, according to the latest research from Moneyfacts.
In turn, this increase in 95% LTV products over the past 12 months in particular, and subsequent intensifying competition, has forced rates down, with the average two year fixed mortgage rate and average five year fixed rate decreasing by 0.73% and 0.71% respectively.
The research also shows that a decade ago, borrowers who could only raise a 5% deposit had just three products from three mortgage providers to choose from. Today, a borrower has the choice between 405 products available from a total of 60 providers. Furthermore, no variable products at the 95% LTV tier were available at all, whereas 10 years on, borrowers have 67 variable products to consider,’ said Darren Cook, Moneyfacts finance expert.
‘As more firms become willing to lend at this higher risk tier, it means that potential borrowers have a greater choice of products, incentives and service from which to choose. This can only be good news to borrowers, especially for those with a preferred provider in mind or those who require a more specific product at this tier,’ he explained.
He pointed out that there clearly seems to be a positive drive by mortgage providers to try and secure the business of potential first time buyers, who are the lifeblood of the mortgage market and it is encouraging to see rates decrease because of this healthy competition. In the past year alone, the average two year fixed rate mortgage rate has fallen by 0.73%, while the average five year fixed rate is 0.71% lower.
‘Despite the increase in the number of providers entering the higher risk LTV tiers, and the increase in product numbers as a result, the Financial Conduct Authority introduced clear affordability measures that mortgage providers must follow in the aftermath of the financial crisis, so potential first time buyers will still need to jump through several affordability hoops before they will find themselves on the first rung of the property ladder,’ added Cook.
Meanwhile, lender Paragon has updated its mortgage options for landlords. The refreshed range includes a choice of two and five year fixed rate mortgages for portfolio landlords and a selection of five year products for smaller scale landlords, with different options for mortgages up to 75% and 80% loan to value (LTV).
Paragon’s portfolio range is designed for landlords with four or more mortgaged properties, as well as those operating in limited companies or limited liability partnerships and can be used to finance single self-contained units (SSCs), multi-unit blocks (MUBs) or houses is multiple occupation (HMOs).
‘The refreshed range gives landlords a wide choice of options to suit their needs depending on the size and complexity of their property portfolio, as well as an opportunity to reduce their up-front costs with a range of cashback and limited up-front fees,’ said John Heron, director of mortgages at Paragon.