Rise in cost of fixed rates for low deposit borrowers
Borrowers with a ten per cent deposit continued to feel the pinch in October, as the average two-year fixed rate rose to 3.55 per cent, the highest level in almost six years.
November could continue on the same trajectory, as the recent wave of first-time buyer focused deals at 90 per cent of the property’s value started at 3.69 per cent from Accord.
The Bank of England’s latest mortgage rate data showed that after rising from 3.32 per cent the month before, two-year fixes at 90 per cent loan to value (LTV) have not been so high since March 2015 when they stood at 3.74 per cent on average.
Rates in the 90 per cent LTV bracket have risen every month since April when two-year fixed rates were being offered at 1.89 per cent on average.
Among the few 95 per cent deals still available, aimed at existing borrowers or offered by regional building societies, the average two-year rate now stands at 4.09 per cent up from 3.95 per cent in September.
The last time two-year fixes for borrowers with a five per cent deposit rose above four per cent was three years ago in October 2017.
Average two-year fixed rates rose in all LTV brackets last month, despite no move in the base rate which has remained at 0.01 per cent since March.
At 60 per cent LTV typical rates are now 1.47 per cent, at 75 per cent LTV rates are 1.85 per cent and at 85 per cent LTV, average two-year fixed rates are 2.97 per cent.