Bigger mortgage deposits 'result in better interest rates'

Date:Thursday 13th May 2010
Author: Susanna Kavka

It is good news that there are more mortgage products available to those with smaller deposits, but people should remember that the more they can offer up front, the better their interest rate is likely to be.

This is the view of mortgages channel manager at Hannah-Mercedes Skenfield, who noted that the supply of 85 and 90 per cent loan-to-value (LTV) products has been too low for a long time.

However, she stated: "Potential borrowers should remain aware that they will find a significantly better deal if they can pull a sizable deposit together."

Ms Skenfield also pointed out that the average rate of a 90 per cent LTV mortgage has dropped below six per cent, but this is still five per cent above the Bank of England's base rate of 0.5 per cent.

This week, the Bank's Monetary Policy Committee revealed that it would be keeping the base rate at this historic low for another month.