31 Dec 2024

Not all fixed rate mortgages are decreasing

Latest Moneyfacts.co.uk figures show that while fixed mortgage rates are falling, they are only doing so for those with significant equity.

The average two year fixed rate for a borrower with a 10% deposit has increased steadily since April 2009, now standing at 6.48%, the highest level since December 2008.

By comparison, the average rate for a borrower with a 25% deposit stands at 4.27%, the lowest level since July 2009.

Fixed Rate Mortgage Decrease

LTV Level	Average Two Year Fixed	Monthly Repayment	True Cost over Two Years
90% LTV	6.48%	£1,011	£24,264
75% LTV	4.27%	£814	£19,536
Based on £150,000 repayment mortgage Source: Moneyfacts.co.uk 11.2.10

Michelle Slade, spokesperson for Moneyfacts.co.uk commented:

“While lenders are slowly increasing the number of deals available to those with a small deposit, which should be good news for first time buyers, they continue to make them pay a heavy price.

“On average, borrowers with a 10% deposit pay £4,728 more over two years than those with a 25% deposit.

“Lenders continue to cherry pick the best customers and appear to be actively discouraging borrowers with a small deposit from remortgaging.

“Figures out today show repossessions at a 14 year high and while some of this can be attributed to extenuating circumstances such as unemployment, many will be as a result of borrowers with little or no equity unable to find competitive financing.

“The cost of funding two year fixed rate mortgages on the swap rate market is at an all time low, but lenders continue to take an increasing margin of 4.85% on 90% LTV deals.

“First time buyers are being offered little incentive to enter the market and there are no real signs of things getting better anytime soon for those with a small deposit.”

Moneyfacts Group
Moneyfacts is the UK’s leading independent provider of personal financial information and our data is used and trusted throughout the financial industry.

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