The cost of borrowing has fallen to rock-bottom while the number of mortgages available has risen to its highest in three and a half years.
But there is a sting in the tail – soaring fees.
The average two-year fixed 90% LTV mortgage rate is now at its lowest level since January 2008.It stands at 5.39%, while the average rate for a five-year fixed deal at 90% LTV is 5.87%.
Two-year fixes generally are at their lowest level. Across the market, they now average just 3.82%, compared with 4.01% in August.However, it is not entirely good news for borrowers, with set-up fees rising as rates have come down.
For example, cheapest of all the two-year fixes is the deal announced by Leeds Building Society last week of just 1.99% for a 70% LTV. But it comes with a fee of £1,999, in fact making it slightly more expensive than Yorkshire’s two-year fix at 2.49%, which comes with a fee of £995.
According to MoneySupermarket, average fees for fixed rate mortgage products have shot up by 6.4% since June, as rates have come down.
However, there is little doubt that lower borrowing rates for those with less in the way of deposits will be welcome for some.Louise Holmes, spokesperson for Moneyfacts, said: “Substantial rate reductions in the higher loan-to-value market will be encouraging news for borrowers.
“The availability of higher loan-to-value mortgage products has increased over the past couple of years. Lenders have begun to launch more competitive products to borrowers who during the height of the credit crisis had pretty much given up on the prospect of owning their own property.“
Interest rates are predicted to stay at the historical low of 0.50% for the foreseeable future. Borrowers would be wise, however, to take advantage of low fixed mortgage rates while they can as lenders will increase product rates once interest rates begin to rise.”
Meanwhile, the number of mortgage products available to intermediaries has increased for the tenth month in a row, according to analysis by mortgage sourcing systems provider Mortgage Brain.
Over 500 new mortgage products were introduced into the UK intermediary mortgage market last month, taking the total number of mortgage products listed on its system to a 41-month high of 14,361.
The figure represents 96% uplift in overall product availability compared to this time last year, and a 38% increase compared to six months ago.
Variable rate products have performed the best over the past 12 months, with a 126% increase since this time last year, and now represent 2,224 of all available products.
The number of fixed rate products increased by number by 3% with 251 new products launched during September, and now account for 8,524 of all available products.
Trackers account for 3,613 of mortgage products.
Mark Lofthouse, CEO of Mortgage Brain, said: “The past few years have been incredibly challenging for the UK mortgage market, and for mortgage brokers in particular.
“However, the data from our product analysis over the last few months has been extremely positive and this continues to be the case.
“Mortgage product numbers continue to rise and are now at their highest level since April 2008, which is great news for the intermediary mortgage market as a whole.“
The number of products with an 80% or more LTV ratio has increased by around 30% over the past six months and the number of buy-to-let products has also increased, with more and more buy-to-let lenders returning to the market.”
