Mortgages  

Choice of mortgage products drops by 13%

Choice of mortgage products drops by 13%
 

Choice for mortgage borrowers has declined further as the number of available products in the residential mortgage sector fell by 13 per cent in August.

Latest data from the Moneyfacts UK Mortgage Trends Treasury report showed the number of available products fell by 517 in August, leaving 3,890 on offer for September. 

The financial data provider said this is the lowest number seen in over a year, with the number of products offered falling across all loan-to-value tiers, the first time this has happened since April 2020. 

Article continues after advert

The data also showed the average product shelf life rose to 28 days in September, up from a record low of 17 days last month, but Moneyfacts finance expert Eleanor Williams said this does not indicate a more stable mortgage market. 

“When considered alongside the significant number of product withdrawals it may instead be a sign that lenders are tightening and condensing their ranges and focusing their product offerings,” Williams said.

Rising rates

The data also illustrated the continued climb of average rates, but Moneyfacts said its analysis showed it is “still imperative” for eligible borrowers to avoid being discouraged by rising rates. 

It said borrowers should explore their mortgage options, as they may be able to reduce their monthly outgoings notably. 

The average standard variable rate has seen the largest monthly rise on Moneyfacts records, going back to December 2007, up 0.23 per cent to 5.40 per cent. 

This is an increase for a ninth successive month and is the highest average rate seen in over a decade, when it sat at 5.68 per cent in December 2008.  

Meanwhile both the average overall two and five-year fixed rates have risen for an 11th consecutive month. 

The average two-year fixed rate is 4.24 per cent, the highest since January 2013 (4.24 per cent), and 1.90 per cent above where it sat in December 2021 (2.34 per cent).

The equivalent average five-year fixed rate of 4.33 per cent is the highest since November 2012 when it sat at 4.47 per cent. This represents an increase of 1.69 per cent above the equivalent rate from December 2021, when it sat at 2.64 per cent.

Williams said while rising rates may be disappointing for many, borrowers nearing the end of their fixed rate should not put off exploring other options as the SVR rate could see their payments rise even more dramatically. 

Williams said: “As may be expected, the average two-year tracker rate has also risen, shifting in line with the recent base rate increases. At 3.33 per cent, this is 1.75 per cent higher than the equivalent average rate in December 2021." 

She added: “While this is lower than the current average two or five-year fixed rates, it’s important that those tempted by one of these products, especially if that preference is based on the lower initial rate, speak to a qualified adviser to consider the implications.

“With another base rate rise possible this month, and the chance of two further increases before year end, ensuring their mortgage remains affordable if rates continue to increase is vital.”