Mortgage availability drops to year's lowest – Moneyfacts

The number of products offered fell across all loan-to-value tiers

Mortgage availability drops to year's lowest – Moneyfacts

As average mortgage rates have continued to climb, the level of choice for borrowers has declined, the latest data from the Moneyfacts UK Mortgage Trends Treasury Report has shown.

According to Moneyfacts, the number of available products in the residential sector fell by 517 over the month to leave just 3,890 on offer for September, the lowest number recorded in over a year. This is 1,425 fewer than were available at the start of December 2021 before the first of the recent base rate increases.

The number of products offered fell across all loan-to-value tiers, the first time this has happened since April 2020.

The average standard variable rate (SVR) or ‘revert to’ rate has increased for a ninth consecutive month, rising by 0.23% to 5.40%. This is the largest monthly rise on Moneyfacts records going back to December 2007, and is the highest this average rate has reached in over a decade.

Also, 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%, the highest since January 2013, and 1.90% above where it sat in December 2021. The equivalent average five-year fixed rate of 4.33% is the highest since November 2012, an increase of 1.69% above the equivalent rate from December 2021.

The average product shelf life rose to 28 days in September, up from the record low of 17 days last month. Moneyfacts noted that rather than this indicating a more stable mortgage market, it may instead be a sign that lenders are tightening and condensing their ranges and focusing their product offerings, when considered alongside the significant number of product withdrawals.

“Would-be mortgage borrowers will find that the level of product choice they are faced with has dropped again this month, now down to a level not seen in over a year,” Eleanor Williams, finance expert at Moneyfacts, said. “It’s unlikely to be a surprise that average rates have continued to march upwards, with both the average overall two- and five-year fixed rates rising for the 11th consecutive month.

“This may well be disappointing for many, particularly those with a now maturing two-year fixed rate deal who may be feeling rather concerned that at 4.24% the overall average rate is now 2% higher than when they secured their deal – which may equate to payments, on average, of over £200 per month more than they have been used to paying.”

Read more: Almost a quarter of borrowers concerned about mortgage repayments, survey finds.

Williams, however, stressed that borrowers should not be discouraged from exploring their options, as the average SVR rate has also risen. Those who slip on to an SVR could see their payments rise even more, and would not be protected from any future rate rises.

“As may be expected, the average two-year tracker rate has also risen, shifting in line with the recent base rate increases,” she said. “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 the year ends, ensuring their mortgage remains affordable if rates continue to increase is vital.”