Higher-LTV loans see bigger cuts

Borrowers with low deposits have enjoyed bigger rate cuts in recent months as competition forces down rates on higher-LTV loans.

The biggest cuts across best-buy deals in the past four-and-a-half months have been for borrowers looking for 90% LTV deals, according to new research from the Nottingham Building Society.

The average rate cut at 90% LTV was 0.88% for fixed deals and 0.64% for variable rate mortgages.

Variable rates at 75% LTV fell by just 0.18% between 11 November 2014 and 30 March 2015.

The average fixed rate to 90% LTV now charges 3.49% compared to 4.37% in November.

The average variable rate now charges 3.18% against 3.82% before (see table).

The higher-LTV rate cuts have come despite a fall in the number of 90% LTV deals, in November there were 455 compared to 427 today.

But the number of 95% LTV deals grew from 126 to 178.

The Nottingham's research reveals that average best-buy fixed and variable mortgage rates fell by up to 0.88%. On a mortgage of £150,000 this would save around £1,300 a year in interest payments.

Research among mortgage brokers also revealed that 23% expect mortgage rates to rise over the next six months but 16% believe rates will continue to fall.

Ian Gibbons, Nottingham Mortgage Services senior mortgage broking manager said: "There is considerable competition in the mortgage market currently and this is driving cuts in rates across the board and particularly at higher LTVs.

"Competition is likely to remain intense and those searching the market should be able to source a competitive deal to meet their needs."

Nottingham Mortgage Services aims to find the best mortgage deal for customers by searching, fee-free, over 40 lenders.