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Rates are rising, but mortgage product choice is falling

Christina Hoghton
Written By:
Christina Hoghton
Posted:
Updated:
07/03/2022

Mortgage products are changing on a daily basis and borrowers are advised to seek advice to find the right deal

Mortgage rates are rising across all product types, according to Moneyfacts, as a result of two back-to-back increases in the Bank of England’s base rate.

The financial information provider said that the average two-year tracker rate rose by 0.33% month-on-month to 2.03% in March. This is an increase of 0.45% since December 2021.

The average Standard Variable Rate (SVR) increased by 0.15% to 4.61%, the largest single monthly rise on Moneyfacts’ records.

Average two- and five-year fixed rates were up for the fifth consecutive month, rising by 0.21% and 0.17% respectively.

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

Fewer products

There’s also been a marked reduction in product availability, said Moneyfacts, which has fallen for the second month in a row.

There are 518 fewer products for borrowers to choose from now than there were at the start of February, which is the largest monthly fall in choice since May 2020 (626) during the early stages of the pandemic.

But there are still 4,838 mortgage deals for borrowers to choose from.

Eleanor Williams, finance expert at Moneyfacts, said: “As well as selected product withdrawals, we have seen providers revamp their product ranges, with a number pulling whole LTV brackets and in one case temporarily withdrawing their entire range.

“Processing almost double the number of product updates from lenders this month as in February, this has seen mortgage product shelf-life plummet by 14 days, from 42 to just 28, giving prospective mortgage customers just a short period to secure their chosen deal.

“Borrowers looking to get onto the property ladder or to remortgage may therefore be wise to seek advice to ensure they are abreast of the changing market and to move forwards with securing the most suitable deal for them.”