This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies. Find out more here.
X
MM+Cover+small+181214
Categories:Mortgages

LTV rate differentials narrow

  • Print
  • Comment

Borrowers are paying less of a premium for higher loan-to-value mortgages as the price difference between lower-LTV and higher-LTV products has narrowed.

Data from Moneyfacts.co.uk shows the average rate on a 60 per cent LTV fixed-rate product today is 4.33 per cent and the average 90 per cent LTV fixed rate is 5.47 per cent, a difference of 1.14 per cent.

In February 2011, the average 60 per cent LTV fixed rate was 4.53 per cent and the average 90 per cent LTV fixed rate was 6.25 per cent, a difference of 1.72 per cent.

This means that, on average, the premium paid for the extra 30 per cent LTV is 0.58 per cent lower than a year ago.

The difference has halved on tracker mortgages. Today, the average 60 per cent LTV tracker is 3.68 per cent and the average 90 per cent LTV tracker is 4.58 per cent, a difference of 0.9 per cent. A year ago, the average 60 per cent LTV tracker mortgage was 3.21 per cent while the average 90 per cent LTV tracker was 4.97 per cent, a difference of 1.76 per cent.

John Charcol senior technical manager Ray Boulger says: “There has been a trend for lenders to narrow the spread between higher and lower-LTV products.

“Logic would dictate that lenders would become more risk averse in light of the eurozone crisis but it has had the opposite effect because by accepting a bit more risk, lenders can get more margin at a time when funding costs are rising.”

  • Print
  • Comment

Daily Email Updates
If you enjoyed this article, sign up to receive the latest news and analysis from Money Marketing.

The Money Marketing CPD Centre
Build your annual CPD - you can log and plan your CPD hours for free with The Money Marketing CPD Centre.

Money Marketing Awards 2015
Put your firm forward as the leading practitioner in your field. Adviser and Advertising categories are open to entries - Enter Now.

Have your sayEdit my profile/screen name

You must sign in to make a comment

AXA Wealth


Fund Data

Editor's Pick



Poll

Will providers be forced to pay out compensation over annuity misselling?

Job of the week

Latest jobs

View all jobs

Most recent comments

View more comments