Mortgage products rebound: There are now more than 4,000 deals on the market
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Banks plunge back into the mortgage market as lending choice expands after the mini-budget crash – and the best solutions have rates below 4%
- The number of products rises to the highest level since August, says Moneyfacts
- Fixed mortgage rates continue to fall amid ‘interest rate war’ with some falling below 4%
The number of mortgage products on the market has passed 4,000 for the first time since August last year, according to the latest data from Moneyfacts.
There are now a total of 4,341 options for mortgage borrowers, up from 3,643 in January. Late last year, lenders began pulling their rates out of the market amid the interest rate chaos caused by September’s mini budget.
Good news for starters: the number of deals with a low deposit has increased compared to a month ago. There are now 539 deals for those with a 10 percent down payment and 149 deals for a five percent down payment.
An increase in available mortgage products suggests that the market is stabilizing after last year’s chaos
Last month there were 435 products for 10 percent deposits and 132 products for 5 percent deposits.
In addition, average rates on two-year and five-year firm deals fell for the third consecutive month.
The average rate for a two-year fixed-term contract is now 5.36 percent, while the five-year average is 5.08 percent, up from 5.79 percent and 5.63 percent at the beginning of the year.
On a £200,000 mortgage over 25 years, the average borrower committing today would now spend £51 less per month on a two-year fix than someone who committed in early January, and £65 less per month on a five-year fix.
Earlier this month, Virgin Money released its first sub-4 percent deal since the mini-Budget chaos at 3.99 percent for a 10-year fix, widely seen as the start of a ‘tariff war’.
Since then, the lender has also released a 3.95 percent five-year fixed remortgage agreement, undercutting Halifax’s offer by 3.99 percent for the same period.
Yorkshire Buidling Society now has a five-year fixed deal at 3.98 percent, and Halifax also cut its rates at the beginning of the month for its range of products.
Down: Mortgage rates peaked in fall 2022 after the post-mini budget economic chaos, but are now moving down
While remaining above 4 percent, two-year fixed-term deals are getting closer. Yorkshire Building Society has a two-year fixed deal at 4.33 per cent for those with a deposit of 25 per cent or more, while Newcastle Building Society has a similar offer at 4.35 per cent.
Rachel Springall, financial expert at Moneyfacts said: “Rate competition seems more focused on five-year fixed-term deals, and the rate differential between this and the average two-year fixed rate of 0.24 percent is the widest margin in nearly 15 years. .
Borrowers at both ends of these loan-to-value tiers can now find lower rates and more choice, but it would be understandable if they waited a little longer for rates to fall.
“The shelf life of mortgage deals has also stabilized at 28 days compared to 15 days a month ago.”
What about tracker rates?
For those with their lender’s standard variable or “revert” rates, the average is 6.84 percent, the highest since October 2008 (7.01 percent), making fixed deals much more attractive than before.
The average tracker rate over two years is now 4.39 percent.
Springall added: ‘Those borrowers who are on their relapse rate may want to note that the average SVR is at its highest point since October 2008, so switching to a fixed deal could help them reduce their monthly mortgage payments and give them peace of mind.
“If borrowers want a little more flexibility to get out of their deal quickly, a tracker mortgage could be a worthy choice, but they should be aware that their rate could go up as well as down in the coming months.”
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