14 September 2021
Biggest cut in mortgage rates for 16 months
It seems that hardly a day goes by without another lender cutting its mortgage rates so it comes as no surprise that average pricing on two- and five-year fixed deals has seen the biggest fall in a single month since May 2020. The average two-year fix fell by 0.14 per cent in September to 2.38 per cent, according to Moneyfacts, while the average five-year fix fell by 0.12 per cent to 2.63 per cent.
These are average rates as well – those with 40 per cent equity in their homes or similar deposit to put down will find they may be able to access even cheaper deals. As the number of available mortgages has also nearly doubled since the same period last year, with just under 5,000 products now on the market, there are welcome signs that the worst of the pandemic is over on the lending front.
Those requiring high loan-to-values (LTVs) in particular have found it difficult to obtain these during Covid as lenders retreated from what they regarded as high-risk lending. But Moneyfacts reports that the largest product increase was in the 90 per cent LTV tier, with 62 products available in September last year, compared with 579 this month. There was also a dramatic increase in 95 per cent LTV products – 14 in September 2020 to 283 this year.
While the cheapest rates are available to those with the biggest deposits, rates fell across all tiers as lenders competed for business. The 95 per cent LTV tier saw the biggest decrease in pricing with the average two-year fix falling from 4.48 per cent in September last year to 3.57 per cent this year.
Lenders remain keen to lend and pricing remains competitive although the best deals are not hanging around for long so any borrower who is interested in a particular mortgage would be wise to secure it as soon as possible. Advice from a mortgage broker is more important than ever; so much choice can be daunting but a mortgage broker can ensure you get the right product for your circumstances.