Low deposit mortgage deals see dramatic rate cuts
There have been large rate cuts across low deposit mortgages in the last month, according to Moneyfacts, driven by continued competition among providers.
The financial information provider said that the most dramatic month-on-month average rate cuts were recorded on mortgages products up to 90% and 95% of the property’s value, where the two-year fixed rates dropped to by 0.29% and 0.25% to 2.56% and 3.32% respectively.
Overall, the average two- and five-year fixed rates fell for a fourth consecutive month. The average two-year rate fell by 0.13% to 2.25% while the five-year equivalent dropped by 0.08% to 2.55%, both sitting at their lowest level since September 2020.
More choice for borrowers
October was the 12th month in a row that product numbers increased and there are now more than double the number of deals than were available a year ago, at 4,939.
Eleanor Williams, finance expert at Moneyfacts, said: “Those with the smallest levels of deposit or equity will be pleased to note the most significant reductions are towards the top of the LTV tiers, and are even more dramatic than last month at both 90% and 95% LTV.
“In particular, the average rates within the two-year fixed market for both these LTV brackets have fallen substantially month on-month (by 0.29% and 0.25%, to 2.56% and 3.32% respectively), both now the lowest at which they have been recorded during 2021.
“Should base rate increase, those borrowers who are on a variable rate mortgage such as their lender’s standard variable rate (SVR) would be at risk of seeing their monthly repayments rise, therefore the benefit of fixing to a new deal and securing a stable rate and payment are clear for many, particularly as there is no guarantee that average rates will continue their downwards trajectory.
“Those considering a new mortgage may wish to secure the knowledge and advice of a qualified adviser, who can help with assessing their priorities and calculating the best route forwards for their circumstances.”