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Rates for mortgages of 90% loan to value have dropped by a third over the last three months meaning those borrowers who have been locked out of the mortgage market may now have a much better chance of getting an affordable home loan.

According to Evaluate Technologies, rates for borrowers with deposits of 10% have fallen by nearly a third in the past three months as competition in the mortgage market increases. It says average initial rates for borrowers at 90% LTV have dropped to 5.3%, down from 7% in November. This cuts monthly payments by £160 on a £150,000 loan.

But the best-buy rates at 90% LTV are still more than double the average 2.58% charged for borrowers at 60% LTV. As is always the case, if you have more money you can afford more equity and that means you are a better bet to lenders and they can afford to offer a cheaper rate of interest on a home loan.

Jim Barrowman, national accounts director at Evaluate Technologies says: “It is a genuine sign of confidence that lenders are now willing to lend at 90% LTVs and also that they are cutting rates for borrowers. The revival is to be welcomed and shows that gradually lenders are getting the message that if people with smaller deposits are creditworthy enough to qualify for a loan they should not have to pay too much of a premium.”

If you want to be sure of the best 90% LTV deal you need to speak to a mortgage adviser. These deals are still rare and they still need a specialist to help manage them from application to signing on the dotted line, and beyond.

SOURCE: Evaluate Technologies, 16/02/10

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