This is the message being issued to borrowers by Moneyfacts.co.uk which revealed the number of deals on the market has plummeted over the last month whilst mortgage rates have continued to rise.
In fact, since August, the number of mortgage options has fallen by 517, according to Moneyfacts.co.uk, as lenders condensed their product ranges.
Meanwhile, in line with Bank of England rate rises, the average two-year fixed rates and five-year fixed rates have increased for the 11th consecutive month.
Borrowers will now find the typical two-year fixed mortgage will have an interest rate of 4.24% – the highest since 2013 and a far cry from average 2.34% seen in December.
For those keen to lock in for longer, the typical five-year fixed rate is now 4.33% – the highest since November 2012 and a big leap from the average of 2.64% in December.
What do rising rates and less choice mean for borrowers?
Falling numbers of mortgage products naturally means less choice for borrowers but it’s not all bad news – the amount of time for which lenders were putting their products ‘on the shelf’ is growing – so, on a more positive note, there is more time to snap up the deals.
With rates going up, borrowers may also expect repayments to go up when they remortgage – but the cost of not remortgaging could actually be more damaging.
Eleanor Williams, finance expert at Moneyfacts, explained those with maturing two-year fixed rate deals – in other words, borrowers who took out their two-year mortgage in Autumn 2020 – may be disappointed by today’s figures.
“They may be feeling rather concerned that at 4.24% the overall average rate is now 2.00% higher than when they secured their deal (September 2020 – 2.24%) – which may equate to payments on average of over £200 per month more than they have been used to paying,” Eleanor said.
“However, it’s important these borrowers are not put off exploring their options, as the average Standard Variable Rate (SVR) or revert to rate has also risen, currently sitting at a 5.40% – the highest we have recorded in over 13 years.
“Those who fall onto this could see their payments rise by an even more dramatic £344, and of course would not be protected from any future rate rises.”
The advice for those who are reaching the end of their deal is, therefore, to speak to a mortgage broker to explore the best option. Eleanor added: “With another base rate rise possible this month, and the chance of two further increases before year end, ensuring their mortgage remains affordable if rates continue to increase is vital.”
