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Mortgage ranges shrinking and rate rises dominate the market

Image of a Moneyfacts Mortgage Treasury Report Image of a Moneyfacts Mortgage Treasury Report Image of a Moneyfacts Mortgage Treasury Report
Eleanor Williams, Press Officer
Eleanor Williams, Press Officer / Finance Expert T: 01603 476205 E: Email Eleanor
07/03/2022

Mortgage ranges shrinking and rate rises dominate the market

Mortgage ranges shrinking and rate rises dominate the market

Data from the latest Moneyfacts UK Mortgage Trends Treasury Report shows that mortgage availability has reduced notably as lenders have condensed and revised their ranges over the past month, seeing both the overall average two- and five-year fixed rates rise again.

 

Data from the latest Moneyfacts UK Mortgage Trends Treasury Report shows that mortgage availability has reduced notably as lenders have condensed and revised their ranges over the past month, seeing both the overall average two- and five-year fixed rates rise again.

 

  • March begins with a marked reduction as product availability declines for a second consecutive month. 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.
  • Following the two recent base rate rises, the average two-year tracker rate for all loan-to-values (LTVs) rose by 0.33% month-on-month to 2.03%. This is an increase of 0.45% since December 2021 – outpacing the 0.40% overall increase the Bank of England base rate has experienced over the same period.
  • The average Standard Variable Rate (SVR) increased by 0.15% to 4.61% this month, the largest single monthly rise on Moneyfacts records, with many providers not yet having amended theirs following the first back-to-back base rate rises since June 2004. The incentive to switch for those on an SVR remains clear, as the average overall two-year fixed rate remains 1.96% below the average SVR.
  • Overall average two- and five-year fixed rates for all LTVs have increased for the fifth consecutive month, rising by 0.21% and 0.17% respectively. At 2.65% the two-year average is the highest we have recorded since November 2015 (2.67%) and the five-year equivalent of 2.88% is the highest we have seen since April 2019 (2.88%).
  • March begins with a marked reduction as product availability declines for a second consecutive month. 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.
  • Following the two recent base rate rises, the average two-year tracker rate for all loan-to-values (LTVs) rose by 0.33% month-on-month to 2.03%. This is an increase of 0.45% since December 2021 – outpacing the 0.40% overall increase the Bank of England base rate has experienced over the same period.
  • The average Standard Variable Rate (SVR) increased by 0.15% to 4.61% this month, the largest single monthly rise on Moneyfacts records, with many providers not yet having amended theirs following the first back-to-back base rate rises since June 2004. The incentive to switch for those on an SVR remains clear, as the average overall two-year fixed rate remains 1.96% below the average SVR.
  • Overall average two- and five-year fixed rates for all LTVs have increased for the fifth consecutive month, rising by 0.21% and 0.17% respectively. At 2.65% the two-year average is the highest we have recorded since November 2015 (2.67%) and the five-year equivalent of 2.88% is the highest we have seen since April 2019 (2.88%).
TR Mortgages Cover Nov21 TR Mortgages Cover Nov21 TR Mortgages Cover Nov21

Mortgage market analysis

 

Mar-17

Mar-20

Dec-21

Feb-22

Mar-22

Fixed and variable rate products

Total product count - all LTVs

4,315

5,222

5,315

5,356

4,838

All LTVs

Average two-year fixed rate

2.33%

2.43%

2.34%

2.44%

2.65%

Average five-year fixed rate

2.93%

2.74%

2.64%

2.71%

2.88%

95% LTV

Average two-year fixed rate

4.07%

3.26%

3.09%

3.05%

3.11%

Average five-year fixed rate

4.51%

3.58%

3.39%

3.35%

3.37%

All LTVs

SVR

4.56%

4.90%

4.40%

4.46%

4.61%

All LTVs

Average two-year tracker rate

1.95%

2.04%

1.58%

1.70%

2.03%

All products

Shelf-Life (days)

38

35

26

42

28

Data shown is as at the first available day of the month, unless stated otherwise. Source: Moneyfacts Treasury Reports

Mortgage market analysis

 

Mar-17

Mar-20

Dec-21

Feb-22

Mar-22

Fixed and variable rate products

Total product count - all LTVs

4,315

5,222

5,315

5,356

4,838

All LTVs

Average two-year fixed rate

2.33%

2.43%

2.34%

2.44%

2.65%

Average five-year fixed rate

2.93%

2.74%

2.64%

2.71%

2.88%

95% LTV

Average two-year fixed rate

4.07%

3.26%

3.09%

3.05%

3.11%

Average five-year fixed rate

4.51%

3.58%

3.39%

3.35%

3.37%

All LTVs

SVR

4.56%

4.90%

4.40%

4.46%

4.61%

All LTVs

Average two-year tracker rate

1.95%

2.04%

1.58%

1.70%

2.03%

All products

Shelf-Life (days)

38

35

26

42

28

Data shown is as at the first available day of the month, unless stated otherwise. Source: Moneyfacts Treasury Reports

Eleanor Williams, Finance Expert at Moneyfacts, said:

“Borrowers contemplating securing a new mortgage deal may be disheartened to see that rates are continuing to rise this month. Fuelled by uplift across LTV tiers, the overall average two- and five-year fixed rates have both continued their climb. After an increase of 0.21% to 2.65% this month the two-year average is now the highest it has been in over six years (Nov 15 – 2.67%) and at 2.88% the five-year equivalent was last this high in April 2019 (2.88%). However, those coming off a maturing five-year fixed deal from 2017 may be able to secure a competitive deal as the average rate remains 0.05% below where it sat in March 2017 (2.93%).

“The level of product choice took a nose-dive this month, reducing by 518 deals to leave 4,838 deals for borrowers to choose from. This is the biggest monthly drop in mortgage availability since May 2020 (626) during the mass product withdrawals recorded in the early stages of the pandemic and leaves borrowers with 384 products fewer than were on offer in March 2020 (5,222). 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 during February, as in January, 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. This may indicate lenders are focusing their offerings by adapting their range to keep up with the fluid changes and borrower demand.

“The only LTV tier where product availability improved was at 95%, which saw an uplift of seven deals, bringing the total to 342. However, March marked the first time that the two-year fixed average rate at 95% LTV has risen since April 2021, going up by 0.06% to 3.11%. The equivalent five-year fixed rate increased for the second consecutive month, inching up a further 0.02% month-on-month to 3.37%. In this sector of the market often favoured by first-time buyers with limited deposits, it’s not too surprising to see lenders continuing to accommodate borrowers with choice, but rate rises across the mortgage LTV spectrum appear to be an inevitable outcome after two base rate rises.

“While factors beyond lenders’ control are uncertain, as the cost of living crisis continues and economic conditions are volatile, to mitigate the risk of default, it could be that providers may tighten their lending belts even further moving forwards. 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.”

Eleanor Williams, Finance Expert at Moneyfacts, said:

“Borrowers contemplating securing a new mortgage deal may be disheartened to see that rates are continuing to rise this month. Fuelled by uplift across LTV tiers, the overall average two- and five-year fixed rates have both continued their climb. After an increase of 0.21% to 2.65% this month the two-year average is now the highest it has been in over six years (Nov 15 – 2.67%) and at 2.88% the five-year equivalent was last this high in April 2019 (2.88%). However, those coming off a maturing five-year fixed deal from 2017 may be able to secure a competitive deal as the average rate remains 0.05% below where it sat in March 2017 (2.93%).

“The level of product choice took a nose-dive this month, reducing by 518 deals to leave 4,838 deals for borrowers to choose from. This is the biggest monthly drop in mortgage availability since May 2020 (626) during the mass product withdrawals recorded in the early stages of the pandemic and leaves borrowers with 384 products fewer than were on offer in March 2020 (5,222). 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 during February, as in January, 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. This may indicate lenders are focusing their offerings by adapting their range to keep up with the fluid changes and borrower demand.

“The only LTV tier where product availability improved was at 95%, which saw an uplift of seven deals, bringing the total to 342. However, March marked the first time that the two-year fixed average rate at 95% LTV has risen since April 2021, going up by 0.06% to 3.11%. The equivalent five-year fixed rate increased for the second consecutive month, inching up a further 0.02% month-on-month to 3.37%. In this sector of the market often favoured by first-time buyers with limited deposits, it’s not too surprising to see lenders continuing to accommodate borrowers with choice, but rate rises across the mortgage LTV spectrum appear to be an inevitable outcome after two base rate rises.

“While factors beyond lenders’ control are uncertain, as the cost of living crisis continues and economic conditions are volatile, to mitigate the risk of default, it could be that providers may tighten their lending belts even further moving forwards. 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.”

Notes to editors

Pioneering financial comparison technology for over 30 years.

Moneyfacts Group plc is the UK’s leading provider of retail financial product data. Used by virtually every bank and building society in the UK, and supplied to the Bank of England, Financial Conduct Authority, Financial Ombudsman Service, HM Treasury, Prudential Regulatory Authority and UK Finance.

Our expert research team monitors the thousands of mortgages, savings, credit card, personal loan, business banking, life, pension and investment products in the UK.

Moneyfacts is the UK's leading independent provider of finance product data. For over 30 years Moneyfacts' information has been a key driver behind personal finance product decisions.

For more information about us please see our key facts.

Broadcast

Our broadcast suite enables our finance experts to appear in-vision for television, and we regularly comment live on national and regional radio.

To arrange an interview for radio or television, please contact our press department. We have an in-house broadcast room.

 

Notes to editors

Pioneering financial comparison technology for over 30 years.

Moneyfacts Group plc is the UK’s leading provider of retail financial product data. Used by virtually every bank and building society in the UK, and supplied to the Bank of England, Financial Conduct Authority, Financial Ombudsman Service, HM Treasury, Prudential Regulatory Authority and UK Finance.

Our expert research team monitors the thousands of mortgages, savings, credit card, personal loan, business banking, life, pension and investment products in the UK.

Moneyfacts is the UK's leading independent provider of finance product data. For over 30 years Moneyfacts' information has been a key driver behind personal finance product decisions.

For more information about us please see our key facts.

Broadcast

Our broadcast suite enables our finance experts to appear in-vision for television, and we regularly comment live on national and regional radio.

To arrange an interview for radio or television, please contact our press department. We have an in-house broadcast room.

 

Contact Us If you're looking for extra comment, a chart or more information, then please give us a call. We are always more than happy to help.
Rachel Springall Press Officer / Finance Expert
Eleanor Williams Press Officer / Finance Expert