Relaxed mortgage market spells good news for borrowers

New research by moneysupermarket.com has revealed that the number of mortgages available at 80% loan-to-value (LTV) is at its highest since October 2008, and that the number of mortgages available at 90% LTV is at its highest since December 2008.

The average rates of these LTV mortgages have also dropped to their lowest level since the fulcrum of the financial crisis in October 2008; since September 2009 the average rate of an 85% LTV mortgage has dropped by 0.68% to 5.54%, whilst the average rate of a 90% LTV mortgage has dropped 0.33% to 5.98% – the first time that this rate has dropped below 6% since the start of the credit crunch.

Hannah-Mercedes Skenfield, Mortgages Channel Manager, moneysupermarket.com, said:

“These are positive signs for people who can only muster a small deposit, or have little equity built up in their home. For too long the supply of mortgages to this group of people has been too limited.

“One of the most telling trends of the last two years has been lenders’ near obsession with equity. The simple fact is that plenty of people can afford mortgage repayments but struggle to save the many thousands of pounds usually required for a 20 to 30 per cent deposit. This means that many people have been needlessly locked out of the mortgage market, perhaps now this will begin to change.

“Potential borrowers should remain aware that they will find a significantly better deal if they can pull a sizable deposit together. Whilst we can be pleased the average rate of a 90 per cent mortgage has finally fallen below six per cent, we should also lament the fact that this is still nearly five per cent above the Bank of England base rate.”