Mortgage rates hit ‘historic lows’ as deal choice halves
The average overall two-year fixed rate is now 2.09 per cent and the average rate for five-year fixes across all loan-to-values (LTVs) has fallen further than last month’s low of 2.66 per cent to 2.35 per cent, according to the Moneyfacts UK Mortgage Trends Treasury Report.
The average rate for a two-year fixed at 75 per cent LTV has decreased from 2.29 per cent on 1 March to 1.97 per cent on 1 May. As for the five-year equivalent, the average rate sits at 2.20 per cent, down from 2.56 per cent in March.
A two-year fixed at 90 per cent LTV has gone down to 2.40 per cent from 2.57 per cent, while a five-year fixed at 90 per cent LTV is now 2.65 per cent from 2.91 per cent.
Rates at the 95 per cent LTV tier have risen however, with the average rate for a two-year fixed at 3.36 per cent up from 3.26 per cent, and the average five-year fixed at 3.62 per cent up from 3.58 per cent.
However, there is less choice available as the number of mortgage deals on the market have reduced by more than half since 1 March, when there were 5,222 deals available to customers.
As of 1 May, there were just 2,566 residential mortgage deals on the market.
Small deposit borrowers hit
Borrowers with smaller deposits are most affected, as the Moneyfacts data suggested 843 of the two- and five-year fixed mortgage products which were pulled had LTVs of 75 per cent and higher.
There are now just 22 two- or five-year fixed mortgage deals at 95 per cent LTV and 50 deals at 90 per cent LTV.
Eleanor Williams, of Moneyfacts, said: “This recent, precipitous fall in product numbers can in part be attributed to lenders initially needing to focus operational resource on supporting their existing customers and managing the volume of mortgage payment holiday requests rather than looking to take on further new business.
“We are now beginning to see lenders relaunching products within their ranges, and some providers have eased the LTV caps they put in place early in the crisis. Mortgage lenders are still open for business and, for those eligible, rates are low.”