Rise In Choice For Mortgage Borrowers | moneyfacts.co.uk

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Derin Clark

Derin Clark

Online Reporter
Published: 10/05/2021

Consumers looking for a new mortgage deal will likely welcome new research which has found that there has been an increase in mortgage deals month-on-month, with deals requiring a small deposit seeing the biggest increase.

The research, which is due to be published in the Moneyfacts UK Mortgage Trends Treasury Report, found that the total number of mortgage deals available to consumers increased by 85 between April and May, up from 3,842 to 3,927.

The number of deals available to those with a 5% deposit or a 95% loan-to-value (LTV), saw the biggest increase, up by 78 month-on-month, from just 34 deals in April to 112 in May. Eleanor Williams, finance expert at Moneyfacts.co.uk, explained this significant increase is due to “providers returning deals to this sector both as part of and outside of the Mortgage Guarantee scheme”. Meanwhile, those with a 10% deposit (90% LTV) will have seen the number of deals available to them increase by 41, up from 440 to 481.

In fact, the number of deals available on all deposit amounts, except those requiring a 20% deposit (80% LTV), increased month-on-month. Those with a 20% deposit (80% LTV), however, will have seen the number of deals available fall by 11, down from 721 to 710.

Two year fixed mortgage rates fall

Along with the increase in product choice, the average two year fixed rate on mortgage deals fell slightly between April and May, down from 2.58% to 2.57%. The average five year fixed rate, however, increased slightly, up from 2.77% to 2.79%, which Williams explained “may tie into the resurgence of higher LTV products, which traditionally carry higher rates”.

She added: “While these averages are both up year-on-year, it is important to remember that in general we remain in a relatively low interest rate environment, with rate reductions evident across many product brackets over the last month and some extremely competitive products on the market for eligible borrowers.”

Mortgage borrowers should use our Mortgage Repayment Calculator to see the impact the interest rate has on their monthly repayments.

Along with looking at the rate being offered, when choosing a mortgage deal, borrowers should also consider other aspects of the deal, such as the product fee and incentives being offered, as these can impact the overall cost of the mortgage deal.

“There has been a reduction to the average fee charged (excluding no-fee deals) compared to last month and a three-day increase on the average shelf-life of a mortgage overall, which means that borrowers have around a month to secure their chosen product,” explained Williams. “As always borrowers would be wise to seek advice if they are looking for a mortgage, not only to navigate the boom in choice, but also to ensure they get guidance on eligibility criteria and support to secure the best option for their circumstances.”

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