“The residential mortgage market has seen a significant increase in product numbers, rising by 244 in the month, which is the largest monthly increase since November 2014. This rise has seen the number of deals reach past 5,000 for the first time since March 2008, when the number of deals stood at 6,192.
“However, the market has significantly changed from 2008, with data from the Moneyfacts UK Mortgage Trends Treasury Report showing that back in 2008 just over half (54%) of the products on the market were fixed rate compared to a whopping 82% this month.
“Unusually, the extra products on the market seem to have had little to no effect on average rates, with the average two-year fixed rate remaining unchanged at 2.52% this month. This suggests providers are currently trying to compete for mortgage business in other ways besides rate. Instead, they are opting to perhaps offer fee-free deals and products with incentive packages, which have in turn boosted product numbers.
“Providers had already made a lot of rate adjustments as they geared up for what seemed a certain base rate rise in May. Although the Bank of England did not increase it, providers have chosen to keep their higher rates, opting to be more cautious and wait and see whether an imminent base rate rise is likely.
“While fixed rate availability at every loan-to-value (LTV) has seen a boost, the 90% LTV has hit a particular milestone with fixed product numbers reaching 624, the highest on Moneyfacts’ records. This is largely because lower LTVs have become increasingly saturated, and as such providers are finding it more difficult to compete in these areas. Lenders are now starting to branch out of their traditional homes and take on different areas of the market, which includes higher LTVs.
“With all these extra options available, borrowers now have a lot more choice, however it can be difficult to navigate to see which is the best deal. So anyone confused as to what is the best option would be wise to seek advice before taking the plunge.”
The Moneyfacts UK Mortgage Trends Treasury Report, out later this week, provides an in-depth monthly review of today’s changing mortgage trends, including all the relevant facts on the UK’s residential and buy-to-let markets.