The difference between interest rates charged on high- and low-risk mortgages has narrowed sharply in the UK over the past five years, suggesting lenders are increasingly relaxed about making home loans to borrowers with smaller deposits.
The spread between rates on a two-year fixed rate mortgage at 90 per cent loan to value and 75% loan to value has narrowed from 1.21 percentage points in January 2014 to 0.29 percentage points last month, according to data from finance website Moneyfacts.
The average rate on a two-year fix at 90% LTV fell from 4.27% in January 2014 to 2.69% last month, Moneyfacts found, while for 75% LTVs it fell from 3.06 to 2.40%.
