base rate rise

More choice available for homebuyers and investors seeking mortgages

Mortgage product numbers are continuing to rise. As lenders gain more confidence, homebuyers and investors seeking mortgages are welcoming the additional choice.

Currently, there is the highest number of mortgage deals on the market since March 2020, when there was a sharp fall in mortgage availability. There are 3,532 mortgage deals available compared to 5,222 in March last year, according to Moneyfacts. There has been a rise in the number of mortgages available across most loan-to-value (LTV) ratios.

This rise in mortgage deals is good news for homebuyers and investors looking to take advantage of the tapering end to the stamp duty holiday. The increase in mortgage availability across the board is providing additional choice as lenders continue to gain more confidence.

A range of mortgages available

The number of mortgage deals with a 25% deposit increased by 60 to 716 this month. This is only 129 fewer than March 2020 when there was 845 deals available. Additionally, over the past few months, there has been a substantial increase in the number of deals with 10% deposits. In January, there were 160 deals, and now there is 323. However, this is 456 fewer than a year ago.

For those with only a 5% deposit, there are still very few deals available. With no change over the past month, there are only five mortgages currently available on the market. Although, this will likely change with the mortgage guarantee scheme starting at the beginning of April.

More choice for buyers and investors

The mortgage guarantee scheme will provide greater mortgage availability for homebuyers with 5% deposits. This will help first-time buyers in particular to find more mortgage options with smaller deposits. Additionally, as the number of first-time buy-to-let landlords has increased, the percentage of mortgage deals available for new landlords has also risen.

Eleanor Williams from Moneyfacts comments: “Borrowers with varying levels of equity or deposit may be pleased to note continued improvements in product availability across the LTV tiers, except for 95% LTV where there are still just five specialist deals on offer.

“However, this may soon change with the Government-backed mortgage guarantee scheme from April where, up to this point in time, first-time buyers may have felt neglected. In 2020 mortgage products for those with small deposits nosedived and saving for a bigger deposit continues to be hampered by rock-bottom savings rates, while demand remains high for the limited number of affordable properties.”

Interest rates are on the rise

Borrowers looking to secure a mortgage are recommended to act soon as interest rates are on the rise. The average rates for both two- and five-year fixed deals have increased. At the highest level since June 2016, the average two-year fixed rate is 2.57%. This is 0.14% higher than a year ago. And the average five-year fixed rate is standing at 2.75%, which is only 0.01% higher than in March 2020.

However, mortgage rates, especially for deals with lower LTV ratios, remain highly competitive. There are also rates available that are substantially lower than the average rates. It could prove to be a good time for homebuyers and investors to lock in competitive interest rates before they potentially rise even more.

Keep in mind that the lowest interest rate doesn’t always mean the best deal, so it’s important to effectively assess available deals on a number of factors, such as product fees, incentives and flexibility. To help you find the best deals for you and your personal circumstances, seek independent financial guidance.

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