Two weeks on from the base rate cut 38 mortgage lenders (38%) have announced that they will cut their mortgage standard variable rate. The majority of mortgage lenders have passed on the full 0.25% Bank of England base rate cut however five have cut their mortgage standard variable rates by less than 0.25%, including Northern Rock which has only passed on a 0.10% cut.
Although many of the mortgage lenders have been quick to pass on the cut in base rate, 43% of them do not have any products linked to standard variable rate. Of the mortgage lenders who have the most standard variable rate linked mortgage products, the top seven have still not announced their intentions post April's base rate cut, see Table 2.
With the exception of HSBC, all the top 10 mortgage lenders have announced their standard variable rate cuts. Currently the average standard variable rate stands at 7.11%. It is disappointing to see that almost half of the top 10 mortgage lenders have standard variable rates above average, with Northern Rock the worst offender with an standard variable rate of 7.49%, which ties in with its business strategy. Despite these quick responses, the range of mortgage products offered by these mortgage lenders will be largely unaffected as only six products from three lenders are linked to standard variable rate.
A surprising fact is the number of mortgage lenders offering mortgages at rates higher than their standard variable rate. Today 21 mortgage lenders offer at least one full status residential mortgage product higher than their standard variable rate including three of the top 10 mortgage lenders.
Despite the Bank of England cutting base rate this month, we have already seen 26 mortgage lenders hike margins on variable tracker mortgage rates available to new mortgage borrowers, some by as much as 1.20%.
The average variable tracker mortgage rate for new mortgage borrowers has increased by 0.28% in the last month alone, from 6.23% to 6.51%.
The average two and five year fixed rate mortgages have also shot up in the last month, two year mortgage rates rising from 6.29% to 6.52% and five year mortgage rates from 6.12% to 6.37%.
Mortgage product numbers continue to decline. At the beginning of the year there were 7,931 mortgage products available; today there are just 3,906, a drop of nearly 50%.
At the beginning of the year there were 862 mortgages available to 95% LTV; now there are 268.
Not all bad news...
According to the Council of Mortgage Lenders, 35% of existing mortgage borrowers are on variable tracker rate mortgages, they will have seen rates drop by 0.50% in the last three months.
All mortgage borrowers still on an initial rate and not looking for a new mortgage deal will have seen their rates either drop or stay the same (depending on whether they are on a variable or fixed rate deal).
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