People borrowing higher loan-to-value (LTV) mortgages are typically being charged one to two per cent higher rates of interest, it has been found.
According to independent financial research company Defaqto, these individuals are paying considerably more than those with agreements for the same amount but as a smaller proportion of their property’s value.
The findings revealed those borrowing at 90 per cent LTV are being hit by interest payments that are one to two per cent greater than those faced by people taking out the equivalent home loans at 70 per cent LTV.
David Black, insight analyst for banking at Defaqto – which was established in 1994 and now provides financial data for more than 30,000 products – noted the current economic climate is making it increasingly tough for individuals, especially first-time buyers (FTBs), to take out money.
The industry figure added: “People borrowing at higher LTV levels are on average paying much more interest than those that need to take on less mortgage debt.”
He observed this gap has been widening of late, making the position increasingly difficult for FTBs.
