base rate rise

Good news for low-risk homebuyers and investors seeking mortgages…

Mortgage product numbers are back on the rise after a steep fall since March. As lenders gain confidence, homebuyers and investors are welcoming the additional choice on offer.

There’s still a long way to go before mortgage availability reaches pre-coronavirus levels, but it’s definitely going in the right direction. After falling sharply back in March when many lenders withdrew a large portion of their products, Moneyfacts data shows numbers are once again on the rise.

Across all loan-to-values, November’s data shows there were 2,404 variable and fixed rate deals available. This is still less than half of what we saw back in March, when there were 5,222 products. However, it’s a healthy rise from October’s low point of 2,259.

Lenders still cautious but things are improving

The best mortgage product availability can be found in the lower loan-to-value market. Borrowers with a 25% deposit will find there are 577 products they can now choose from. This is up from 534 in October, and heading back towards March’s figure of 845 deals. The data shows lenders are still keen to offer business to lower risk clients in general.

At the other end of the scale, mortgages are still hard to come by for those with small deposits. Moneyfacts data for November shows there are just 56 variable and fixed-rate deals available at 90% LTV. The number is rising, up from 51 in October, but still a long way from recovering to the 779 products on offer in March.

For homebuyers who can scrape together an extra 5% for their deposit are in luck, though. There are currently 344 deals to choose from at 85% LTV, up from 329 and over halfway back to March’s figure of 664.

Finally, borrowers looking at an 80% LTV will find 471 products available at the moment, up from 422 last month.

Secure the best deals now

While the growing product numbers are certainly good news for borrowers, interest rates are also creeping up. They have now risen for their fourth consecutive month across almost all term-lengths and LTVs.

Again, homebuyers with the biggest deposits will find the best deals. In the 75% LTV range, interest rates are actually lower now than they were in March, despite nudging upwards this past month. The average two-year fixed rate is now 2.27% (compared to 2.29% in March) with a 25% deposit. For five-year fixed rates, the average is 2.51%, again slightly down from March’s 2.56%.

But in all the other LTV brackets, rates are slowly but steadily increasing. Moneyfacts is urging borrowers to secure the best deals now if they can, as there is a prospect interest rates could continue to rise.

Eleanor Williams from Moneyfacts says: “With mortgage rates rising, borrowers looking to lock into a two or five year fixed deal should consider acting quickly to secure the lowest mortgage rates while they are still available.”

“When looking at mortgage deals, borrowers should also keep in mind that the lowest rate may not be the best option for them and instead they should consider other factors of the deal, such as product fees and incentives.”

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