Anyone with less than 25% deposit/equity will find that the new deals on offer are just too uncompetitive. According to Moneyfacts the average two-year fixed rate deal is 5.05%; it would be 6.29%, 6.02%, 4.80% or 4.37% with deposits of 10%, 15%, 25% or 40% respectively. The average two-year tracker deal is 4.11%; it would be 4.79%, 4.11% or 4.05% with deposits of 15%, 25% or 40% respectively. There are no trackers available to those with a 10% deposit.
The average SVR is 4.99%.
Michelle Slade, analyst at Moneyfacts.co.uk, commented: "There is simply no incentive at the moment for borrowers to go out and get a new deal. If you only have a small amount of equity in your home you are going to move onto your lender's standard variable rate (SVR) rather than pay over 6.00%.
"At a rate of 6.29% your monthly repayments on a £150,000 mortgage would be £993. If you are with Nationwide BS or Cheltenham & Gloucester your SVR is now 3.50%, which equates to £751 a month.
"It is going to take something pretty special to make a borrower pay £5,808 more over the two year term.
"Borrowers with less than 25% equity are in the majority, but they are being penalised with deals costing 2% more than on offer for those with 40% equity.
"Until we start to see competitive deals at 85% and even 90% LTV, we are not going to see any real improvements in the lending figures.”
