Mortgage borrowers face ‘double blow’ of higher rates as choice halves
The average two-year fix at 75% loan to value (LTV) now costs £585 more than it did six months ago, analysis by business information site Defaqto found.
The company said more expensive mortgages was a “worrying trend” with rates up to 2.33% from 2% six months ago.
At the same time, the total number of mortgage products available has dropped by more than half since January, from 2,477 products down to 1,099.
First-time buyers are the worst hit as not only are mortgages more expensive but there are so few products available to them right now, the firm added.
Katie Brain, insight analyst for banking at Defaqto, said: “Although the Bank of England base rate hasn’t moved since March and there is talk of negative interest rates coming in, this is not the case for mortgages.
“Unfortunately, there is so much demand right now that lenders do not need to offer the incredibly low rates we saw earlier in the year. This could be the beginning of an upward trend in mortgage rates, as we are seeing rates creep up across the board.
“For anyone looking to get a mortgage right now, it is a particularly difficult time as the market is constantly changing with some deals only available for a few days at a time.”
However, Brain added it was worth remembering that interest rates are still at historically low levels.
“Although rates may have been cheaper a few months ago, they are still much lower than they were two years ago,” she said.