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Mortgage choice doubles as rates continue to fall

Nick Cheek
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Nick Cheek

The total number of mortgage products stands at 4,341 – nearly double the figure recorded in October – while rates continue to trickle down for those looking for a fixed deal.

This is the first time since August last year that the product count has gone over 4,000, according to Moneyfacts.

It revealed the product count is up from 3,643 in January this year but below the figure of 5,356 in February last year.

However, product choice has nearly doubled since the end of October, when it stood at a lowly 2,258 in the aftermath of the disastrous mini Budget which saw multiple product withdrawals amid market uncertainty.

Moneyfacts said that the return in product options was a “positive sign of stability” following the mini Budget.

Deals at the 60% loan to value (LTV) category (40% deposit) has increased by 122 deals between January and February to 606, which is the highest level in three years.

Meanwhile, deals at 95% LTV (for those with a 5% deposit) increased to 17 products in February, and at 90% LTV, products have risen by 104 to 539 deals.

Fixed rate pricing falls and shelf life grows

Average two- and five-year fixed rates have fallen month-on-month for the third consecutive time to 5.44% and 5.2% respectively.

Indeed, last week saw a number of lenders cut their rates to sub-4% as the mortgage rate war heats up.

But the gap between average two- and five-year fixed rates is 0.24%, the largest in almost 15 years. In March 2008, the margin was 0.31%.

Meanwhile, the average Standard Variable Rate (SVR) has continued to climb, standing at 6.84% in February. This is the highest since October 2008 where it stood at 7.01%.

Elsewhere, the average shelf life of a mortgage product increased to 38 days, which is the joint highest since March last year. It is also an improvement from the 15 day low seen a month ago.

The firm said this could be due to “further stability among lenders”, adding that repricing has been “rife over recent months”.

SVRs at highest rates since 2008

Rachel Springall, finance expert at Moneyfacts, said: “Borrowers with a limited deposit may be pleased to see choice expand month-on-month and that both the two- and five-year average fixed rates at 95% LTV sit below 6% for the first time since October 2022.

“On the other end of the spectrum, both choice and rates at 60% LTV improved, following a rise of 122 to 606, availability within this tier is at its highest level in three years (February 2020 – 611).”

She added that the movements show that borrowers on both end of the LTV tiers “could now find lower rates and more choice, but it would be understandable if they were to wait a bit longer for rates to come down”.

Springall added: “Those borrowers sitting on their revert rate may wish to note the average SVR stands at its highest point since October 2008, so switching to a fixed deal may help them reduce their monthly mortgage repayments and give them peace of mind.

“If borrowers want a bit more flexibility to come out of their deal quickly, a tracker mortgage could be a worthy choice, but they must keep in mind that their rate could rise as well as fall in the months to come. It is imperative borrowers take time to seek advice to ensure they are considering all the options available, particularly as fixed interest rates are expected to fall further in the coming months.”