The mortgage market has seen a rise in the number of products on offer giving homeowners more choice as rates reach new lows.
Data from Moneyfacts shows the number of mortgage products has reached 4,460 the highest number for nine years while the cost of borrowing has reached a new low giving homeowners more choice.
Increased competition has seen mortgage rates fall by 0.02% since April 2017 with the two-year tracker rate has hit 1.91%, the lowest average mortgage rate ever recorded.
The average two-year fixed mortgage rate at a record low of 2.30%, while the five-year equivalent is now at 2.89%.
These positive changes gives first time buyers, home movers, remortgage buyers and buy-to-let landlords more choice and lower repayment costs.
More products and choice for borrowers
The number of mortgage products available has increased by 119 over a month and by 849 in the last year to 4,460.
Lower mortgage rates benefit buy-to-let investors as they can remortgage to reduce the cost of interest repayments to lenders.
This is the highest total number seen since the peak of March 2008 when 6,192 products could be accessed, just before the financial crisis impacted the mortgage market.
Number of mortgage products available to borrowers from Moneyfacts are shown below.
| Month | Number of products |
|---|---|
| May 2017 | 4,460 |
| Apr 2017 | 4,341 |
| Nov 2017 | 4,162 |
| May 2016 | 3,611 |
| Mar 2008 | 6,192 |
The increase in choice for homeowners means there are many more competitive mortgage deals on the market offering lower rates reducing the cost of monthly repayments.
With lower interest rates home movers have the opportunity to make overpayments, reducing the loan to the lender and total cost of the mortgage.
Charlotte Nelson, finance expert at Moneyfacts said the residential mortgage market has seen a significant increase in product numbers, resulting in the largest year-on-year increase since our records began.
With extra competition from lenders remortgage buyers can shop around for lower interest rates especially if their current mortgage is on the standard variable rate (SVR).
For lenders to protect their mortgage book against the possibility of losing borrowers when they reach the end of a fixed rate term they need to look attractive when borrowers start to consider remortgaging, says Ms Nelson.
Mortgage market very different today
Since the financial crisis the mortgage market has changed fundamentally with lenders more focused on risk associated with borrowers.
The Mortgage Market Review has stabilised the market and the lender is more focused on the long term affordability of the mortgage for the homeowner.
Ms Nelson said, in 2008 property prices were rising at an incredibly fast pace where home buyer deposits were small and there were 575 deals available at 95% loan to value (LTV) whereas today there are 257.
Today the market is more structured where the number of mortgage deals are sorted by risk and borrowers with more equity are rewarded with lower rates.
In 2008 there were only 24 products with a 60% LTV whereas today there are 549.
Having a larger deposit for a first time buyer or more equity for a remortgage buyer or home mover can significantly reduce the interest repayments over the loan term.
Competition is also rising for older homeowners as there is significantly higher activity with equity release buyers accessing wealth in their property with more lenders offering lower lifetime mortgage rates.
What are your next steps?
Talk to our London City Mortgage brokers for advice if you remortgage your existing home and want the best mortgage deal or release capital, buying your first home, moving home or are a buy-to-let investor.
For older homeowners releasing equity from your property, our LCM mortgage advisers can recommend the lifetime mortgage, accessing wealth to repay an interest only mortgage, holidays or gift to a family member.
Learn more by using the equity release calculator, mortgage cost calculators, and property value tracker chart. Start with a free mortgage quote or call us and we can take your details.
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