More than 1,500 mortgage deals have been withdrawn from the market in the last two weeks as lenders reassess their businesses in light of the Covid-19 pandemic.
As well as many pulling tracker deals, which have rates which mirror the Bank of England base rate, some have also axed products for borrowers who have less than a 40% deposit or equity.
Yesterday, Nationwide became the latest lender to announce it would only offer mortgages to customers who required a loan-to-value (LTV) of less than 75% – which are those borrowers with a deposit or equity of more than 25%.
Last week Barclays and Halifax said they would not be offering loans of more than 60% LTV.
According to Moneyfacts.co.uk, a financial data research firm which is constantly monitoring mortgages, there are also other providers who have limited their ranges for new customers.
Lenders say the move will enable them to concentrate on supporting customers who need to take mortgage holidays. However, Moneyfacts said it would also enable them to lower their exposure to risk.
Eleanor Williams, finance expert for Moneyfacts, explained: “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.”
Remortgaging
Data from Moneyfacts shows the difference between the average lenders’ standard variable rate (SVR) and a two-year fixed rate deal is still 2.39%. For this reason, anyone who has defaulted to their lender’s rate, having come to the end of a deal, may still save money by remortgaging.
Williams said: “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.”
| Residential mortgage market analysis (source: Moneyfacts) | |||||
| Average mortgage rates | Aug-18 | Jan-19 | 11-Mar-20 | 19-Mar-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. Source: Moneyfacts.co.uk | |||||
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Hi. My Santander 2 year fix ends on 1st March. Currently I am on 1.79%. The best fixed rate I am being offered by Santander is 1.74% for both a 2 and 3 year fix. I am wondering should I hold out for a better rate (temporarily going onto their follow on rate of 3.35%, or go onto their “best offer” thanks
We have passed this query to our expert. You mention your deal ends on 1 March – do you mean May or has it already ended?