Average 90 per cent LTV two-year fixed dropped to three-year low
The average two-year fixed rate with a 90 per cent loan-to-value (LTV) mortgage has fallen to its lowest level since January 2008, according to Moneyfacts.
The average rate is now 5.39 per cent, down from 6.05 per cent six months and 5.97 per cent 12 months ago. Its five-year counterpart has also dropped its rate to 5.87 per cent, a drop of 1 per cent less than six months ago and down from 6.66 per cent a year ago.
Unsurprising, the average two year fixed rate mortgage has too followed suit and dipped to 3.82 per cent. Leeds Building Society has strongly contributed to this lower rate by bringing the lowest fee to the market of just 1.99 per cent.
According to moneysupermarket.com, it is the building societies that lead the way when it comes to the lowest rates; the comparison sites’ top five cheapest two-year fixed mortgages are all offered by building societies. However, behind these alluring low rates could be an uglier high fee.
The Leeds low 1.99 per cent, for example, comes with a £1999 fee. On average, arrangement fees are up 6.4 per cent from Q2 with property buyers set to pay £939 compared to £846 in June 2011.
Louise Holmes, spokesperson for Moneyfacts said:
“Substantial rate reductions in the higher LTV market will be encouraging news for borrowers.
“The availability of higher LTV mortgage products has increased over the past couple of years. Lenders have begun to launch more competitive products to borrowers who, during the height of the credit crisis, had pretty much given up on the prospect of owning their own property."
She added: "Interest rates are predicted to stay at the historical low of 0.50% for the foreseeable future. "Borrowers would be wise, however, to take advantage of low fixed mortgage rates while they can as lenders will increase product rates once interest rates begin to rise.”¹
¹Mortgage Solutions (Oct 2011)
Content correct at time of publication