This is according to the latest analysis from Mortgage Brain which revealed the cost of borrowing for high-LTV customers had risen ‘substantially’ across all mortgage types in the last year.
The mortgage technology firm used the example of a 90% LTV two-year fixed rate deal for which the cost had jumped by more than 28% between November 2019 and November 2020.
This means the cost per £1,000 borrowed leaped from £4.06 to £5.22 over the year. For a loan of £200,000 this equates to an annual increase of £2,784.
But it was not just two year-deals which were impacted by the price rises. Mortgage Brain found the cost of a three-year fixed rate mortgage at 90% LTV went up by 17.2% across the same period. This is an increase from £4.31 to £5.05 per £1,000 borrowed.
Neil Wyatt, sales and marketing director at Mortgage Brain, said: “Lenders have understandably taken a more cautious approach to their product ranges due to the operational and potential economic impacts that have been experienced as a result of the Covid-19 pandemic, and that’s been seen most clearly with the products on offer to borrowers with a deposit of just 10%.
“Not only has there been a significant reduction in the availability of these products, but the costs of the products that are on the market have increased to a striking extent.
“It’s not just those with small deposits that face higher costs than a year ago though. In fact, it’s only five-year fixed rate mortgages which have seen costs fall over the last 12 months.”
Indeed, while five-year fixed rate mortgages at 90% LTV had gone up by 9.7%, moving from £4.35 to £4.77 per £1,000 borrowed – in other LTV tiers the costs reduced.
Mortgage Brain found costs at 60%, 70% and 80% LTV have all dropped over the last 12 months, by 4.95%, 3.42% and 3.80% respectively.
However, in the two and three year -market, rates went up for the lower LTV borrowers. The analysis showed a 60% LTV two-year fixed rate had grown 2.96% from £3.71 to £3.82 per £1,000 borrowed, while the cost of a three-year fixed rate at the same LTV band has jumped to £4.24 from £3.98 per £1,000 borrowed, an increase of 6.53% over the year.
