Borrowers 'paying heavy price' for increased lending
Friday, 12 February 2010 12:00
By myfinances.co.uk staff
Mortgage lenders are making borrowers pay a "heavy price" for increasing the number of deals on the market for people with small deposits, it has been claimed.
Independent finance service Moneyfacts said while fixed mortgage rates are falling overall, customers with loan-to-value (LTV) ratios of 90 per cent are paying an average of 6.48 per cent, the highest charge since December 2008.
This puts their monthly repayments on a £150,000 loan at £1,011, or £24,264 over a two-year fixed deal.
By comparison, typical rates for borrowers with a deposit of 25 per cent are at their lowest level since July 2009 at 4.27 per cent.
Their monthly repayments for a £150,000 loan are £814 or £19,536 over two years.
Michelle Slade of Moneyfacts said: "First-time buyers are being offered little incentive to enter the market and there are no real signs of things getting better anytime soon for those with a small deposit."
November 2009 figures from the Department for Communities and Local Government show the average house price for first-time buyers was £147,569.
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