First-time buyers or borrowers with a 10% deposit are set to benefit the most from the current reductions in mortgage costs, new research shows.
According to the latest quarterly figures from Mortgage Brain, the cost of a two-year fixed mortgage with a 90% LTV is now 6% lower than it was this time last year.
With a current rate of 2.79% over two years the reduction in cost equates to a potential annual saving of £504 on a £150,000 mortgage.
Similarly, a 90% LTV two-year tracker at 2.54% has also seen a 6% reduction in cost over the past 12 months, equating to an annual saving of £468.
The biggest saving comes in the shape of a five-year tracker with a 90% LTV, which with a current rate of 2.55% is now 13% cheaper than it was in July 2015, giving a potential saving of £1,206.
The majority of 60% LTV mortgages have remained the same or increased in cost over the same period.
A two-year fix with a rate of 1.89% now costs almost 2% more than it did this time last year, while a 90% LTV five-year fixed has not changed since July last year.
Mark Lofthouse, CEO of Mortgage Brain, said: “Despite the Bank of England confirming that the UK’s main interest rate will be held at 0.5% there is still a lot of uncertainty about rate movement and the cost of borrowing following Britain’s decision to leave the EU. A rush of rate cuts is still predicted and our month on month analysis validates this with the cost of mortgages falling slightly compared to last month.
“Our longer term analysis, however, clearly shows that homeowners – particularly first-time buyers or those with low deposits – are in a very good position to benefit from the current reductions in the cost of mortgages.”
There are some positives for those with bigger deposits. The cost of the lowest rate five-year tracker with a 60% LTV is now 7% lower than it was 12 months ago and offers borrowers a potential annual saving of £630 on a £150,000 mortgage.
The mortgage price war has escalated in recent months following hints by Bank of England Governor Mark Carney that the Bank rate could be cut in the event of a Brexit vote.
Since the financial crisis in 2008 mortgage rates have steadily fallen.
With lenders slashing rates, experts believe there has never been a better time to get a mortgage.
HSBC recently launched a two-year fixed rate mortgage that has an interest rate of 0.99%, the lowest since records began.
Nationwide has cut its fixed rate and tracker mortgages by up to 0.25%, while Halifax has reduced its rates on its first-time buyer mortgage range by 0.30%.
Coventry Building Society has also launched the lowest ever 10-year fix at 2.39%.
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