Sharp drop in mortgage products as average rates hit seven-year high

Sharp drop in mortgage products as average rates hit seven-year high

There has been a significant fall in the volume of mortgage products offered to borrowers as lenders pulled more than 500 deals, and average rates hit seven-year high, new research shows.

There were 518 fewer mortgage products available at the start of March compared to the beginning of February, according to Moneyfacts.

Overall average two- and five-year fixed rates for all LTVs have increased for the fifth consecutive month, rising by 0.21% and 0.17% respectively.

At 2.65%, the two-year average is the highest recorded since November 2015 (2.67%), and the five-year equivalent of 2.88% is the highest seen since April 2019 (2.88%).

Moneyfacts said this was the biggest monthly fall in availability since May 2020, when 626 products were pulled as a result of uncertainty and disruption caused by the pandemic.

This left 4,838 deals for borrowers to choose from, 384 fewer than were on offer in March 2020.

Many lenders have merely responded to increases in the Bank of England’s base rate by removing individual products from the market, while others have suspended lending for particular deposit sizes.

Eleanor Williams, Finance expert at Moneyfacts, said: “Borrowers contemplating securing a new mortgage deal may be disheartened to see that rates are continuing to rise this month. Fuelled by uplift across LTV tiers, the overall average two- and five-year fixed rates have both continued their climb. After an increase of 0.21% to 2.65% this month the two-year average is now the highest it has been in over six years (Nov 15 – 2.67%) and at 2.88% the five-year equivalent was last this high in April 2019 (2.88%). However, those coming off a maturing five-year fixed deal from 2017 may be able to secure a competitive deal as the average rate remains 0.05% below where it sat in March 2017 (2.93%).......