Mortgage Options Increase As Rates Get Competitive

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Data released today on Moneyfacts.co.uk shows food choices are now at their highest level since the start of the pandemic, growing for the eighth straight month.

Moreover, those with smaller deposits appeared to benefit the most, as options at the 95% loan-to-value (LTV) level rose. In fact, another 80 new deals have been added in this market sector since last month.

However, when it comes to rates, the picture is mixed. Although some lenders, including Countrywide – launched transactions below 1%, there are LTV levels where average rates are higher than at this time last year.

Moneyfacts reports that the rise in higher LTV deals, higher interest rates, and higher average LTV rates have again triggered a rise in total two- and five-year fixed rates, which now stand at 2.59% and 2.82%, respectively.

However, compared to June 2019, the five-year fixed rate is now on average 0.03% lower.

Shelf life

Meanwhile, Moneyfacts has also shown how, with rapid and rapid changes in products and criteria, the average shelf life of a mortgage transaction has declined.

This meant that potential borrowers only had 28 days to close their chosen deal, which means speed and preparation can be key to ensuring that they can implement their preferred option.

The data comes as UK Finance recorded the largest number of home advances since August 2007, and also showed that advances to buyers for the first time, at 42,330, were the highest on record.

Eleanor Williams, financial expert at Moneyfacts, said: “There has been a noticeable surge in mortgage lending. Lenders are responding to this with improved product choices: there are now 316 more products on offer from last month, and total mortgage availability exceeds 4,000 for the first time since the pandemic began more than a year ago. ”

She added: “The resurgence of high LTV products and the fact that their average rates are starting to fall is particularly good news for new buyers, especially as the recent Nationwide Building Society House Price Index report showed that house prices have grown by almost £ 24,000 over the past year, which means that it is even more difficult to create a 5% deposit now. “

Competition

Williams continued: “Along with the changes in the upper LTV levels, rate competition became apparent at the opposite end of the LTV spectrum as a number of lenders began attractive mortgage deals below 1% in the lower LTV tiers.

“These record low rates are available to borrowers with low risk and high capital levels, but it remains to be seen if this competition will extend to higher LTV deals as we assess the full economic impact of the past year.”

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