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Cost of 95% LTV mortgages on the rise

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The cost of 95 per cent loan-to-value two-year fixed products has risen over the last 18 months despite Government attempts to boost lending to those with small deposits.

Figures from Moneyfacts show borrowers with a 5 per cent deposit are paying 14 basis points more today for a 95 per cent LTV two-year fixed rate on average, at 5.46 per cent, than in September 2011 when it was 5.32 per cent.

The average rate on a five-year fix at 95 per cent LTV remains at 5.61 per cent, the same level seen in September 2011.

The number of 95 per cent LTV products available in the market fell 34 per cent from 79 in March to 52 this month. This is up from 43 products in September 2011.

Coreco director Andrew Montlake says: “Pricing falls will take a while to hit the 95 per cent LTV product area. It is important that lenders get capital relief for the Government’s Help to Buy scheme. Pricing will eventually start to come down but it is going to be a slow process.”

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