Potential borrowers face significant rate and cost differences between LTV ratios, according to product data analysis from Mortgage Brain.
The analysis, a breakdown of all main product types in the UK mortgage market (direct and broker) for a repayment mortgage, is calculated by the lowest rate for a property of £180,000 and has shown that the lowest interest rate for a 90% two-year tracker is more than twice that of the lowest rate product with a 60% LTV – 105% higher.
The difference in the lowest rate available between a two-year fixed with a 90% LTV and a 60% LTV product is almost as great – 82% – with the lowest rates being 1.64% (60% LTV) and 2.99% (90% LTV) respectively.
In terms of actual cost over a two year period, the lowest two-year fixed rate mortgage with a 90% LTV will cost borrowers 20% more than the lowest rate 60% product of the same type.
Similarly, borrowers face a 14% difference in cost for the repayment of the lowest rate two-year tracker with a 90% LTV compared to the lowest rate 60% LTV product.
Mark Lofthouse, CEO of Mortgage Brain, claimed the firm’s new product data analysis provides a very clear and concise picture of the true cost of a repayment mortgage and makes like for like comparisons to be made across different product types.
He said: “Not only can this new data assist brokers when they’re conducting a mortgage search and comparing products with their clients, but lenders can also use it to ascertain the position and competitiveness of their products within the market.”
The analysis since the beginning of 2013 shows favourable results for the overall performance of interest rates.
Based on Mortgage Brain’s new analysis, the lowest rate two=year fixed rate product with a 90% LTV has come down by 19% over the past three months and 24% since January 2013 – down from 3.94% in January to 2.99% at the start of July.
The lowest rate two-year fixed rate product with a 60% LTV, by comparison, has seen an interest rate drop of 6% since April 2013 and an 18% drop over the past six months (down from 1.99% to 1.64%).
The interest rate for a two-year tracker with a 60% LTV has come down by 30% since the start of the year, down from 2.49% in January to 1.75% at the start of the month. The current rate, however, has held steady for the past three months at 1.75% month on month since April 2013.
The lowest rate two year Tracker with a 90% LTV has seen less fluctuation over recent months with interest rates down 4% since April and 7% since January 2013 – down from 3.84% to 3.59%.