Mortgage lenders withdraw products | moneyfacts.co.uk

Derin Clark

Derin Clark

Online Reporter
Published: 31/03/2020

Although mortgage rates have continued to fall, homeowners looking to remortgage may find it more difficult as many lenders have withdrawn their mortgage deals from the market in response to the Coronavirus pandemic.

Last week, we reported that smaller lenders were withdrawing products in the higher loan-to-value (LTV) range, but since then many high street mortgage lenders have also removed mortgage deals from the market. For example, today Nationwide has temporarily withdrawn all its high LTV mortgages to instead focus on supporting existing customers through the Coronavirus outbreak, along with processing ongoing applications. Our research has found that since the 11 March, there has been a total of 1,585 mortgage products withdrawn from the market.

The withdrawal of so many mortgage products from the market will not only make it difficult for those looking to get onto the housing ladder or move home, but also for those wanting to remortgage, especially if they own a small amount of equity in their property.

Mortgage rates fall

The withdrawal of deals will come as a disappointment for mortgage borrowers, however our research has found that average mortgage rates have continued to fall this month. A contribution to the fall in average mortgage rates this month is likely to have been Bank of England base rate cuts that took place on 11 March and 19 March. In fact, our research has found that the average two year fixed mortgage rate has fallen by 0.06% from 11 March to today, while the average five year fixed mortgage rate has fallen by 0.05% during this same period. Meanwhile, the average standard variable rate (SVR) has seen the biggest fall since the first base rate cut on 11 March to today of 0.14%.

Despite seeing the biggest reduction, homeowners on an SVR who are able to remortgage onto a fixed deal should consider doing so, as the average SVR is still much higher than the average two or five year fixed rate.

Residential mortgage market analysis 

Average mortgage rates Aug 18 Jan 19 11 March 20 19 March 20 Today
Standard variable rate (SVR) 4.72% 4.90% 4.90% 4.84% 4.76%
Two year fixed mortgage 2.53% 2.52% 2.43% 2.41% 2.37%
Five year fixed mortgage 2.93% 2.94% 2.73% 2.71% 2.68%
Number of products available 5,075 5,181 5,239 5,177 3,654

Average rates shown are as at the first available day of the month, unless stated otherwise. 

Commenting on the current mortgage market, Eleanor Williams, finance expert at Moneyfacts.co.uk, said: “The recent withdrawal of many higher LTV mortgage products and home purchase products is hopefully a temporary measure while lenders reassess risk in this area of the market and work out what it will be possible for them to offer while the current restrictions are in place. With so much uncertainty at the moment, providers seem to initially be focusing on the support that their existing customers may need in the coming weeks.

“However, there may still be borrowers sitting on their provider’s standard variable rate (SVR) waiting to see what the impact of these rate cuts will be and by how much their monthly payments will reduce. With the difference between the average two year fixed mortgage rate and average SVR standing at 2.39% today, the benefit of switching to a new deal while rates are low is evident for those eligible, and would protect these customers from interest rate volatility in the future.

“We have to hope now that the mortgage market is able to rebound as quickly as we have seen it contract, once we begin to come out the other side of the Covid-19 crisis.”

Disclaimer

Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

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