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Eleanor Williams

Finance Expert & Press Officer
Published: 07/03/2022

Standard Variable Rate (SVR) mortgages have seen the largest single monthly rise on Moneyfacts records, following two back-to-back base rate increases by the Bank of England since December.

The latest Moneyfacts UK Mortgage Trends Treasury Report reveals that the average SVR increased by 0.15% to 4.61% in March. The incentive for SVR mortgage holders to switch to a fixed-rate deal is clearer than ever, because the average interest rate on a two-year fixed deal, for example, is almost two percentage points cheaper, even though rates on fixed mortgage deals are also creeping up.

The average cost of a two-year tracker mortgage across all loan-to-values (LTVs) rose from 1.70% to 2.03% between February and March. This is an increase of 0.45% since December, outpacing the 0.40% increase in the Bank of England base rate over the same period.

Fixed-rate deals get more expensive

In the fixed-rate segment of the mortgage market, rates are climbing across all LTV brackets. At 2.65%, the average rate on a two-year fixed deal is the highest Moneyfacts has recorded in seven years. Meanwhile, at 2.88%, the overall average on a five-year fix is at a three-year high.

In the 95% LTV bracket, the average two-year fix climbed from 3.05% to 3.11%, while the average five-year fix inched up from 3.35% to 3.37%.

Product choice shrinks

Produce choice across the mortgage marketplace declined sharply in March, Moneyfacts data shows. Lenders have revised and condensed their product ranges over the past month and, at 4,838 total products, there are now 518 fewer deals for borrowers to choose from. This is the largest monthly fall in choice since the early stages of the pandemic in 2020.

Borrowers looking to secure a new mortgage deal may be “disheartened” to see rates are continuing to rise in March, says Eleanor Williams, finance expert at Moneyfacts. “Fuelled by the uplift across LTV tiers, the overall average two- and five-year fixed rates have both continued their climb. However, those coming off a maturing five-year fixed deal from 2017 may be able to secure a competitive deal as the average rate remains 0.05% below where it sat in March 2017, at 2.93%.”

Lending uncertainty ahead

She adds that the level of product choice on offer “took a nose-dive this month” in the biggest monthly drop in mortgage availability since May 2020, when lenders pulled deals en masse as the pandemic took hold. “As well as selected product withdrawals, we have seen providers ramp up their product ranges with a number pulling whole LTV brackets and, in one case, temporarily withdrawing their entire range.

“Processing almost double the number of product updates from lenders during February, as in January, 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.”

Mortgage providers may tighten their belts further in future, with uncertainties ahead, so those looking to remortgage or buy their first home should take professional advice to stay one step ahead of a changing market.


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