Mortgage products rebound with second highest monthly increase taking total to over 5,000
Mortgage chaos abates: the surge in new home loan launches means the number of available borrowers is more than DOUBLE that of last October
- There are now more than double the products available compared to October 2022
- Number of high deposit deals of 60% LTV is now the highest on record
- Rates for two-year and five-year fixes have risen higher
Mortgage availability increased by 774 products to 5,146 in April, the second largest monthly increase ever recorded.
It is the first time the number has risen above 5,000 since May 2022 and is the highest since February 2022 when it reached 5,356.
The only bigger monthly increase was from October to November last year when 869 new products were launched, Moneyfacts data shows.
Brighter outlook: many more mortgage options are now available again, but rates are higher for the first time this year
There are now more than double the number of home loans on the market than in October 2022 at the height of the mortgage crisis when rates rose sharply in the mini budget.
Higher borrowing costs due to the Liz Truss administration’s unfunded list of pledges forced lenders to withdraw products from the market and drive up interest rates.
From September to October, the number of products fell 42 percent to 2,258. In November, they recovered slightly to 3,117.
For higher deposit deals, available mortgages at 60 percent loan rose 45 percent in April to a total of 702, the highest at that loan ratio on Moneyfacts’ record.
There is also an increase in choice for borrowers with smaller deposits. The 85 percent LTV product group saw one of the biggest increases during the month and with 806 deals available, the level is at the highest level according to Moneyfacts’ records.
But there’s a sting in the tail. Mortgage rates have risen this month for both two-year and five-year fixed rates. It is the first time this year that average rates have risen in a month.
The two-year fixed rate average for all loans is 5.35 percent and the five-year average is 5.05 percent – this is an increase from 5.32 percent at two years and 5 percent at five years in March.
At the same time, the average standard variable rate is now 7.3 percent, the highest level since February 2008 when it reached 7.31 percent.
A standard variable rate is the rate a lender moves you to when your fixed or tracker mortgage ends. They follow the Bank of England base rate plus a surcharge.
Rate hikes: Mortgage rates have fallen after peaking, but seem to have found a level
Moneyfacts’ Rachel Springall said: ‘Interest rate competition among lenders has been mixed over the past month, but fixed mortgage rates are widely expected to fall in the coming months, but this will be determined by fluctuating swap rates and lender readiness. for business.
“Those borrowers with a large down payment or equity may be pleased to see that average 60 percent loan-to-value rates for a two-year or five-year fixed mortgage are below 5 percent.”
However, those coming off a two-year fixed mortgage and want to refinance at the same term (60 percent LTV) will be in for a shock.
The average interest rate on a two-year fixed-term mortgage was 1.63 percent in April 2021, compared to 4.95 percent in April 2023.
This significant rise in interest rates means that for a £200,000 mortgage over 25 years, a borrower would have paid £812 a month two years ago, would now pay £1,163 – an increase of £351.
Earlier this year, a brief interest rate war between lenders caused some firm deals to fall as low as 3.75 percent. However, since then they have risen again, but there are still deals below 4 percent on offer.