LTV is the loan-to-value percentage, so the higher the number, the more of the property’s value is borrowed instead of paid for up front. Lenders are looking to win more business in 80-90% area by cutting their interest rates.
If we look at NatWest Intermediary Solutions, for example, we can see cuts of more than .5%
NatWest Intermediary Solutions’ Mark Bullard explains:
”The bulk of our residential rate cuts are for the higher-LTV mortgages, including our first-time buyer only deals, underlining our appetite for supporting this sector of the market.”
In the higher-LTV market, even small rate changes add up quickly. So, let’s translate the percentages into a hypothetical mortgage. We’ll reach for a mortgage repayment calculator (and pretend that the interest rate will stay the same for the whole life of the mortgage), and plug in:
- loan amount: £185,000
- Interest rate: 5.09%
The initial monthly repayments will be £1,091, and in total, we’d pay £327,364.
If we nudge that rate down by .5%, we’d save £53 each month. Overall, we’d end up saving £16,035. Yes, £16 grand. It’s the most important market in which to shop around, and to find the right deal.