Rate competition extends across higher LTV tiers

Image of a Moneyfacts Mortgage Treasury Report Image of a Moneyfacts Mortgage Treasury Report Image of a Moneyfacts Mortgage Treasury Report
Eleanor Williams, Press Officer
Eleanor Williams, Press Officer / Finance Expert T: 01603 476205 E: Email Eleanor
11/10/2021

Rate competition extends across higher LTV tiers

Rate competition extends across higher LTV tiers

Data from the latest Moneyfacts UK Mortgage Trends Treasury Report shows continued competition among providers has resulted in significant reductions across higher loan-to-value (LTV) tiers month-on-month.

 

Data from the latest Moneyfacts UK Mortgage Trends Treasury Report shows continued competition among providers has resulted in significant reductions across higher loan-to-value (LTV) tiers month-on-month.

 

  • Headlines may have been dominated by the rate war waged on lower risk lower LTV brackets, citing sub-1% mortgage rates. However, the most dramatic month-on-month average rate cuts to LTV tiers were recorded at 90% and 95%, 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 (2.24% and 2.49% respectively).
  • Choice continues to improve in the residential sector as October marks the 12th consecutive month of increase in product numbers. Rising by a further 127 this month to 4,939, although still slightly below the number on offer pre-pandemic (March 2020 – 5,222), there are now more than double the number of deals that were available this time last year.
  • Headlines may have been dominated by the rate war waged on lower risk lower LTV brackets, citing sub-1% mortgage rates. However, the most dramatic month-on-month average rate cuts to LTV tiers were recorded at 90% and 95%, 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 (2.24% and 2.49% respectively).
  • Choice continues to improve in the residential sector as October marks the 12th consecutive month of increase in product numbers. Rising by a further 127 this month to 4,939, although still slightly below the number on offer pre-pandemic (March 2020 – 5,222), there are now more than double the number of deals that were available this time last year.
Cover of the October edition of Moneyfacts Mortgage Treasury Report Cover of the October edition of Moneyfacts Mortgage Treasury Report Cover of the October edition of Moneyfacts Mortgage Treasury Report

Mortgage market analysis

 

Oct-16

Oct-19

Oct-20

Sep-21

Oct-21

Fixed and variable rate products

Total Product count - all LTVs

4,091

4,955

2,259

4,812

4,939

Product count - 95% LTV

240

371

12

283

293

Product count - 90% LTV

570

758

51

579

610

All LTVs

Average two-year fixed rate

2.38%

2.45%

2.38%

2.38%

2.25%

Average five-year fixed rate

3.02%

2.75%

2.62%

2.63%

2.55%

95% LTV

Average two-year fixed rate

3.97%

3.28%

4.74%

3.57%

3.32%

Average five-year fixed rate

4.51%

3.64%

4.08%

3.83%

3.63%

90% LTV

Average two-year fixed rate

2.81%

2.65%

3.64%

2.85%

2.56%

Average five-year fixed rate

3.53%

2.96%

3.89%

3.23%

3.05%

Data shown is as at the first available day of the month, unless stated otherwise. Source: Moneyfacts Treasury Reports

Mortgage market analysis

 

Oct-16

Oct-19

Oct-20

Sep-21

Oct-21

Fixed and variable rate products

Total Product count - all LTVs

4,091

4,955

2,259

4,812

4,939

Product count - 95% LTV

240

371

12

283

293

Product count - 90% LTV

570

758

51

579

610

All LTVs

Average two-year fixed rate

2.38%

2.45%

2.38%

2.38%

2.25%

Average five-year fixed rate

3.02%

2.75%

2.62%

2.63%

2.55%

95% LTV

Average two-year fixed rate

3.97%

3.28%

4.74%

3.57%

3.32%

Average five-year fixed rate

4.51%

3.64%

4.08%

3.83%

3.63%

90% LTV

Average two-year fixed rate

2.81%

2.65%

3.64%

2.85%

2.56%

Average five-year fixed rate

3.53%

2.96%

3.89%

3.23%

3.05%

Data shown is as at the first available day of the month, unless stated otherwise. Source: Moneyfacts Treasury Reports

Eleanor Williams, Finance Expert at Moneyfacts, said:

“As living costs are on the increase, it is good news that mortgage rates have continued to reduce. At 2.25% and 2.55% respectively, the average overall two- and five-year fixed rates are the lowest they have been in 13 months, fuelled by falls in the average rates across the majority of the loan-to-value (LTV) tiers. Borrowers now have the chance to secure lower rates than were on offer a year ago when the sector was being rocked by the pandemic. In addition, those who took a now maturing two-year deal in October 2019 and those who locked in to a five-year initial term in October 2016, despite the turbulent past 18 months, may also be able to reduce their monthly mortgage payment outgoings, as the overall average rates are lower now than were on offer when they secured their current deals.

“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. The gap between taking a two- or five-year fixed deal at these LTVs has widened month-on-month, however, first-time buyers may still prefer to lock into five-year fixed rate deal, especially with murmurings of an interest rate rise on the horizon.

“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.”

Eleanor Williams, Finance Expert at Moneyfacts, said:

“As living costs are on the increase, it is good news that mortgage rates have continued to reduce. At 2.25% and 2.55% respectively, the average overall two- and five-year fixed rates are the lowest they have been in 13 months, fuelled by falls in the average rates across the majority of the loan-to-value (LTV) tiers. Borrowers now have the chance to secure lower rates than were on offer a year ago when the sector was being rocked by the pandemic. In addition, those who took a now maturing two-year deal in October 2019 and those who locked in to a five-year initial term in October 2016, despite the turbulent past 18 months, may also be able to reduce their monthly mortgage payment outgoings, as the overall average rates are lower now than were on offer when they secured their current deals.

“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. The gap between taking a two- or five-year fixed deal at these LTVs has widened month-on-month, however, first-time buyers may still prefer to lock into five-year fixed rate deal, especially with murmurings of an interest rate rise on the horizon.

“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.”

Notes to editors

Pioneering financial comparison technology for over 30 years.

Moneyfacts Group plc is the UK’s leading provider of retail financial product data. Used by virtually every bank and building society in the UK, and supplied to the Bank of England, Financial Conduct Authority, Financial Ombudsman Service, HM Treasury, Prudential Regulatory Authority and UK Finance.

Our expert research team monitors the thousands of mortgages, savings, credit card, personal loan, business banking, life, pension and investment products in the UK.

Moneyfacts is the UK's leading independent provider of finance product data. For over 30 years Moneyfacts' information has been a key driver behind personal finance product decisions.

For more information about us please see our key facts.

Broadcast

Our broadcast suite enables our finance experts to appear in-vision for television, and we regularly comment live on national and regional radio.

To arrange an interview for radio or television, please contact our press department. We have an in-house broadcast room with ISDN (01603 230551) and Skype (Moneyfacts).

 

Notes to editors

Pioneering financial comparison technology for over 30 years.

Moneyfacts Group plc is the UK’s leading provider of retail financial product data. Used by virtually every bank and building society in the UK, and supplied to the Bank of England, Financial Conduct Authority, Financial Ombudsman Service, HM Treasury, Prudential Regulatory Authority and UK Finance.

Our expert research team monitors the thousands of mortgages, savings, credit card, personal loan, business banking, life, pension and investment products in the UK.

Moneyfacts is the UK's leading independent provider of finance product data. For over 30 years Moneyfacts' information has been a key driver behind personal finance product decisions.

For more information about us please see our key facts.

Broadcast

Our broadcast suite enables our finance experts to appear in-vision for television, and we regularly comment live on national and regional radio.

To arrange an interview for radio or television, please contact our press department. We have an in-house broadcast room with ISDN (01603 230551) and Skype (Moneyfacts).

 

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Rachel Springall Press Officer / Finance Expert
Eleanor Williams Press Officer / Finance Expert