There are 3,890 residential mortgage products on the market in September, 517 fewer than this time last month.

This is the lowest number of deals seen since April 2021, according to Moneyfacts data, when there were 3,842 mortgages on the market.

It is also 1,425 fewer deals than there were as of December 2021, before the first rise in the base rate from the historic low of 0.1%

Further, the decline in mortgage products is apparent across all loan to value (LTV) tiers, which is the first time this has happened since April 2020. 

Rates on the up 

As mortgage product choice has fallen, the average rates have continued to rise. 

As of September, the average two-year fixed rate is 4.24%, up from 3.95% last month. Compared to last year, this is a jump from September 2021’s average of 2.38% and even higher than September 2020’s average of 2.24%. 

Average five-year fixed rates now stand at 4.33%, up from 4.08% in August. Compared to last year, this is up from an average of 2.63% in the same month in 2021, and an increase from an average of 2.49% in September 2020. 

Both the average two and five-year fixed rates have increased for the 11th month in a row. The current two-year average is at its highest since January 2013, when this was 4.24% while the five-year average is the highest it has been since November 2012, when it was 4.47%. 

Just last week, YourMoney.com revealed how Nationwide Building Society repriced its mortgage rates so a 10-year fixed deal was cheaper than the two- or three-year equivalents.

Variable rates have risen too. The average standard variable rate (SVR) is now 5.4%, compared to 5.17% in August. This time last year, the average was 4.41%. 

This is the ninth consecutive increase to the average SVR, and with a monthly jump of 0.23% this was the highest increase since Moneyfacts’ records began in December 2007. The current average is also at its highest level since December 2008 when it was 5.68%. 

The average two-year tracker rate is 3.33%, up from 2.84% in August. Compared to last year, this is up from an average of 2.55%. 

Eleanor Williams, spokesperson at Moneyfacts, said: “Would-be mortgage borrowers will find that the level of product choice they are faced with has dropped again this month, now down to a level not seen in over a year.  

“The average product shelf life rose to 28 days in September, up from the record low of 17 days last month, but rather than this indicating a more stable mortgage market, when considered alongside the significant number of product withdrawals it may instead be a sign that lenders are tightening and condensing their ranges and focusing their product offerings.” 

‘Disappointing’ changes  

Williams added: “This may well be disappointing for many, particularly those with a now maturing two-year fixed rate deal who may be feeling rather concerned that at 4.24%, the overall average rate is now 2% higher than when they secured their deal (September 2020 – 2.24%) – which may equate to payments on average of over £200 per month more than they have been used to paying. 

“However, it’s important these borrowers are not put off exploring their options, as the average SVR or revert to rate has also risen, currently sitting at 5.4% – the highest we have recorded in over 13 years. Those who fall onto this could see their payments rise by an even more dramatic £344, and of course would not be protected from any future rate rises.”  

Cheaper tracker rates 

She said while the average tracker rates were lower than fixed rates, “it’s important that those tempted by one of these products, especially if that preference is based on the lower initial rate, speak to a qualified adviser to consider the implications.  

“With another base rate rise possible this month, and the chance of two further increases before year-end, ensuring their mortgage remains affordable if rates continue to increase is vital.”