More mortgage deals on the market but rates continue to rise

Those looking to capitalise on the stamp duty holiday extension will welcome the news that there is now the highest number of mortgage deals on the market since March 2020, but should be aware that average two and five year fixed rates have continued to rise.

Figures due to be published in the Moneyfacts UK Mortgage Trends Treasury Report show that there are 3,532 mortgage deals available in March, this is the highest there have been since March 2020 when there were 5,222 deals available.

There has been an increase in the number of mortgage deals available across most loan-to-value (LTV) tiers this month. For example, those with a 25% deposit, which would enable them to get a 75% LTV deal, saw the number of deals available increase by 60 to 716 this month, which is just 129 fewer than a year ago when there were 845 deals available. Meanwhile, those with a 10% deposit, who would need a 90% LTV deal, will have seen the number of deals increase rapidly over the last few months, up from 160 in January to 323 this month. Saying this, there are still 456 fewer 90% LTV deals than a year ago when there was 779 available. However, for those with just a 5% deposit, the number of deals available at a 95% LTV still remains low, seeing no change over the past month, with just five deals available.

“Borrowers with varying levels of equity or deposit may be pleased to note continued improvements in product availability across the LTV tiers, except for 95% LTV where there are still just five specialist deals on offer,” explained Eleanor Williams, finance expert at Moneyfactscompare.co.uk. “However, this may soon change with the Government-backed mortgage guarantee scheme from April where, up to this point in time, first-time buyers may have felt neglected. In 2020 mortgage products for those with small deposits nosedived and saving for a bigger deposit continues to be hampered by rock-bottom savings rates, while demand remains high for the limited number of affordable properties.”

Borrowers looking to get a mortgage deal may want to consider acting sooner rather than waiting, as figures show that average mortgage rates on both two and five year fixed deals have continued to rise, with the average two year fixed rate now at its highest level since June 2016.

The average two year fixed rate now stands at 2.57%, which is 0.14% higher than a year ago when it stood at 2.43%. Meanwhile, the average five year fixed rate is 0.01% higher year-on-year, standing at 2.75% this month compared to 2.74% in March 2020. Saying this, mortgage rates, especially on lower LTV deals, remain highly competitive and rates are currently available in our mortgage charts that are significantly lower than the average rates.

Those looking for a new mortgage deal should look at our mortgage charts to see the current deals and rates available today. Those wanting further help on choosing the best deal can also speak to our preferred mortgage broker Mortgage Advice Bureau, which will be able to provide advice tailored to specific needs and circumstances.