Product choice widens as confidence returns: Moneyfacts
The number of mortgage products increased for the fifth consecutive month, a sign of a return of confidence in the market, according to an analysis by Moneyfacts.
There are now 3,532 offers on offer, which is the highest since 5,222 products available as of March 2020.
In the last two months alone, 639 products have been added.
Product availability has improved in all levels of loan-to-value LTV except 95% LTV where there are still only five offers on offer.
However, last week’s budget announcement of a new mortgage guarantee scheme gave new hope to borrowers with the smallest deposits.
Costs continued to rise, with the two-year average fixed rate for all LTVs reaching 2.57%, the highest level since June 2016.
The five-year equivalent fixed rate reached 2.75%, which is higher than it has ever been since November 2019.
The two-year average of 90% LTV has increased from 2.57% to 3.52% over one year, while the number of offers currently available is less than half of the figure proposed in March 2020, to 323 against 779.
At 75% of LTV, the cost of average two-year fixed rates fell slightly from 2.29% a year ago to 2.27% this month, while the number of products fell from 845 to 716.
The average hold period of all mortgage transactions has fallen to 26 days, the lowest on record since May 2017, leaving borrowers little time to guarantee the transaction they have chosen.
Moneyfacts financial expert Eleanor Williams says, “Over the past six months, the number of products has increased by 1,120.
“Compared to the increase of just 165 over the six months between July 2020 and January 2021, this shows how significant revenue growth has been and that lenders are coming back with confidence.
“Growth in product availability appears to keep pace with demand, as separate data from UK Finance indicated that the number of purchases in the last quarter of 2020 was at a level not seen since 2007 and demand may remain high due to the announcement of the budget on support for borrowers.
“Borrowers with varying levels of equity or deposit may be pleased to note continued improvements in product availability across LTV levels, with the exception of 95% LTV where there is still only five specialized offers offered.
“However, that may soon change with the government-backed mortgage guarantee program starting in April where, so far, first-time buyers may have felt overlooked.
“In 2020, mortgage products for those with small deposits have plunged and are saving for a larger deposit continue to be hampered by lowest savings rates, while demand remains high for the limited number of affordable properties. ”