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Mortgage rates rise as lenders pull deals

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Written by: Lana Clements
07/03/2022
Mortgage rates are rising as lenders have condensed their offerings while borrowers have to go faster to secure the best deals.

Lenders have pulled 518 mortgages from the market in just a month, according to analysis by Moneyfacts.

It is the largest monthly fall since May 2020 and the early stages of the pandemic.

At the same time, the average two-year tracker increased by 0.33% between February and March to 2.03%. This means an increase of 0.45% since December 2021, higher than the Bank of England base rate’s rise of 0.40%.

Two and five-year fixes have increased by 0.21% and 0.17% respectively.

Two-year fixed rates are now at their highest level since November 2015, sitting at an average of 2.65%.

And five-year deals are 2.88%, which is the highest since April 2019.

Eleanor Williams from Moneyfacts, said: “As well as selected product withdrawals, we have seen providers revamp their product ranges with a number pulling whole loan to value (LTV) brackets and in one case temporarily withdrawing their entire range.

“Processing almost double the number of product updates from lenders this month as in February, this has seen mortgage product shelf-life plummet by 14 days, from 42 to just 28, giving prospective mortgage customers just a short period to secure their chosen deal.

“This may indicate lenders are focusing their offerings by adapting their range to keep up with the fluid changes and borrower demand.”

Conversely, product availability improved for borrowers with a very small deposit of five per cent.

There were seven new 95% Loan-to-Value (LTV) deals in February bringing the total to 342.

However, average rates for this sector increased above both two and five-year rates in line with the wider market.

There could be further increases and lowered choice in the coming weeks, according to Williams.

She added: “While factors beyond lenders’ control are uncertain, as the cost of living crisis continues and economic conditions are volatile, to mitigate the risk of default, it could be that providers may tighten their lending belts even further moving forwards.”

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