High interest rates and lenders reluctance towards new business has been blamed for a huge dip in available mortgage products. Finance data website Moneyfacts have released figures that the number of products offered fell across all loan-to-value tiers have fallen drastically, the first time this has happened since April 2020 before the start of the pandemic.
Moneyfact’s new data has revealed that the number of available products in the residential sector has dropped by 517 over August, leaving just 3,890 products across the entire market in September. This is 1,425 lower than in December 2021, before lenders started increasing their rates on mass. The clearest and most obvious answers for why this is happening is the Bank of England rate rises affecting the products and rates that lenders are offering and the obvious reluctance to lend that the banks and building societies are unfortunately going to go through until the economy improves. Lenders are withdrawing the more competitive and attractive products from their websites and either replacing them with not so attractive products or completely removing them.
What Have Moneyfacts said?
Finance expert at Moneyfacts Eleanor Williams has commented on the reduced products and high interest rates:
“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 (April 2021 – 3,842). This month began with 3,890 deals to choose from – a notable 1,425 fewer than the 5,315 products on offer in December 2021. The average product shelf life rose to 28 days in September, up from the record low of 17 days last month, but rather than this indicating 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.
“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. The average two-year fixed rate is 4.24%, the highest since January 2013 (4.24%), and 1.90% above where this sat in December 2021. The equivalent average five-year fixed rate of 4.33% is the highest since November 2012 (4.47%), an increase of 1.69% since December 2021.”
What Do The Mortgage Experts Say?
Content and communications manager at Oportfolio Louis Mason has also commented on the high interest rates and huge reduction in available products:
“517 products lost is a BIG loss, lets not sugar coat anything here. That’s at least 517 families that can’t buy their dream house now because the banks don’t want to lend to them. All the banks are doing by reducing the amount of products is hindering a clearly still hungry property market. I understand the reservations that banks have as we face a recession, but removing so many products and pricing out so many clients with high interest rates is not fair.
Luckily, there are still plenty of lenders offering relatively low interest rates and products. As a whole of market mortgage broker, we can still help our clients to find the best available products. But how far will things go up? Is there an end in sight for high interest rates and the mortgage product exodus?”
If you or anyone you know are worried about mortgage products or rising rates, please free to give our helpful advisor team a call today to see how we can help.