In January, borrowers had the highest number of mortgages to choose from since March 2020 according to figures released by Moneyfacts. In a further sign that the mortgage market is stabilising, the number of days for which individual mortgages are available before lenders withdraw them rose from 28 days in January to 40 days.
There was a raft of new deals available with 3,215 mortgages to choose from, including fixed rate and tracker mortgages – the highest number in nearly a year, when the first national lockdown was implemented across the UK when there were 5,222 mortgages available. This number is continuing to rise as we head towards spring.
Since October 2020, the number of mortgages available has increased by 42%. This is the largest four-monthly rise in choice since in 13 years.
When we went into a national lockdown in March 2020, mortgage choice fell dramatically as the property market closed to all those except people currently moving, and lenders withdrew their mortgages while they assessed the risks of lending during the pandemic.
First time buyers with small deposits were hit the hardest with 90% of mortgages for those with a 10% deposit were withdrawn between March and the end of June. The good news is that choice is once again improving, especially for those with small deposits. Lenders are less risk averse and stable interest rates have increased competition in the mortgage market.
For first time buyers with a 10% deposit the number of deals available quadroupled during the last four months, and interest rates have fallen. A two-year fixed rate loan for someone borrowing 90% of their home’s value dropped 0.09% in January, while the cost of a five-year fixed rate deal dropped 0.07%.
For those with a 5% deposit, choice remains very limited with just five deals available in January.
Things are also looking up for home-movers and people looking to remortgage their property. The number of available deals has significantly increased, with nearly 500 different mortgages available for people borrowing 60% of their home’s value in January. In addition, the cost of a mortgage has reduced for people with large equity stakes of at least 40% in their home.
Interest rates for a two-year fixed rate mortgage for home movers fell 0.05%, while rates on five-year fixed rate deals fell 0.07%.