Higher LTV mortgage rates continue to fall
The Bank of England released data today about mortgage rates by Loan To Values (LTVs)
What they said
Average mortgage rate for 75% LTV mortgages 1.56%
Average mortgage rate for 90% LTV mortgages 1.95%
Average mortgage rate for 95% LTV mortgages 2.77%
Twindig take
The average rate for a 75% LTV two-year fixed-rate mortgage has increased for the last three months in a row from its September 2021 lows of 1.20%. Despite the increase, the 75% LTV two year fixed rate is still 16.9% below the rate it was 12 months ago.
The average mortgage rates for the higher LTV mortgages continue to fall. The average two-year fixed rate for a 90% LTV mortgage fell below 2.0% in December 2021.
It is unusual for high LTV mortgage rates to fall as Bank Rate rises and we would not expect this situation to continue in the face of further Bank Rate rises. We would therefore encourage those households in the re-mortgaging window to seize the day and lock in the current attractive mortgage rates whilst they last.
95% LTV Mortgages
The average mortgage rate on 95% LTV mortgages is 2.77% a fall of 4.8% from the previous month when the rate was 2.91%.
On average the rate you can fix today is 34% lower than it was one year ago. This will be welcome news given the high levels of speculation this week that mortgage rates will be starting to rise.
90% LTV Mortgages
The average rate on 90% LTV mortgages fell below 2% in December 2021 to is 1.95%, which is 3.5% lower than the previous month when the rate was 2.02% and 48% lower than the same time last year when the average rate was 3.75%. This again will be welcome news especially for those who are moving down the LTV scale as they re-mortgage from say a 95% LTV mortgage to a 90% LTV mortgage
75% LTV mortgages
The average mortgage rate on 75% LTV mortgages is currently 1.56% an increase of 2.6% compared to the average rate last month of 1.52%. This is the third month in a row that the mortgage rate for 75% LTV 2 year fixed-rate mortgages has risen, the rate has increased by 30% over the last two months. However, the average mortgage rate for a 75% LTV 2 year fixed rate mortgage is 16% lower than it was one year ago.
Mortgage calculator
To check how much your existing mortgage payments are and to see what they could be if you re-mortgage, you can use our handy mortgage calculator
What does this mean for house prices?
Falling mortgage rates imply that a homebuyers money will go a bit further, allowing them to secure a larger mortgage, which, in our view will put upward pressure on house prices. Stock levels remain tight and buyer demand remains high. The fall in higher LTV mortgage rates will not be as powerful a catalyst as last year's stamp duty holiday, but many expect mortgage rates to rise this year and this may encourage more buyers into the market this spring.