Its research shows two-year tracker rates for borrowers with a 40 per cent deposit can be as low as 3.99 per cent while for two-year fixed rates they can be 4.49 per cent for a £150,000 loan.
But if the borrower only has a 20 per cent deposit rates rise to 5.99 per cent for trackers and to 6.45 per cent for fixed rates. If the borrower only has a 10 per cent deposit then there are no trackers and the lowest rate for a fixed deal is 6.45 per cent.
That translates into huge differences on the true cost of the deal including all fees. The average true cost of a two-year fixed deal at 60 per cent loan-to-value is £21,265 compared with £25,729 for a 90 per cent deal – a difference of £2,232 a year.
For a two-year tracker the difference in true cost is £1,919 a year – the average cost at 60 per cent LTV is £20,907 compared with £24,746 at 80 per cent LTV.
The huge range in rates and the massive differences in true cost shows the mortgage market is still a long way from returning to normal, mform.co.uk believes.
Francis Ghiloni, Marketing and Business Development Director at mform.co.uk, said: “The mortgage market is entirely back to normal as long as you have a deposit of 40 per cent which is okay for some remortgagers - but of course that is a long way from normal and doesn’t help the housing market as by definition to move up to larger properties families need to stretch their borrowing.
“It is encouraging that there are good deals out there but disappointing that the choice is reduced for those with smaller deposits who will typically be first-time buyers or those who have bought in recent years and have not seen a significant rise in their homes value.
“The differences in true cost for the same loan are simply staggering – an extra £2,200 a year is a substantial slice out of anyone’s budget and that price differential will continue to act as a drag on the market.”
LTV - TRUE COST OF TRACKER OVER TWO YEARS - TRUE COST OF FIXED OVER TWO YEARS
60% - £20,907 - £21,265
75% - £21,893 - £21,477
80% - £24,746 - £24,179
90% - N/A - £25,729
Based on £150,000 interest-only loan
Currently the best buys for two-year trackers at 60%LTV include HSBC, Abbey and Lloyds TSB while at 75% LTV it is Abbey and C&G and at 80% Derbyshire.
For fixed-rates the best buys at 60 per cent LTV include Abbey, Principality and Alliance & Leicester while at 75% it is Principality, Abbey and Halifax and at 80% it is Britannia, Scottish Widows and Yorkshire Building Society. At 90% LTV it is Bristol & West.
mform.co.uk offers a unique free service linking mortgage customers directly to the application systems of lenders. It is the only website which allows borrowers to search the whole market for the best products ranked on true cost and to apply directly to lenders.
Unlike many mortgage websites mform.co.uk offers direct mortgages from lenders rather than limiting customers to broker products which are often more expensive.
The service is completely independent and is not influenced by commercial deals or advertisements. There are no distracting sponsored links and borrowers can also research mortgage product features and lenders’ service levels.
mform.co.uk works with lenders by enabling them to link with informed mortgage customers and by reducing lenders’ costs allows them to pass on savings to customers.
The service, which is free and easy to use, can be found at www.mform.co.uk.
